4 ms·

I could be wrong about this, but I don't know if the energy requirements have anything to do with the price (I.e. demand) for the coin, does it? I was under the

I could be wrong about this, but I don't know if the energy requirements have anything to do with the price (I.e. demand) for the coin, does it? I was under the impression that the problems that you have to solve get predictably more difficult, and they're more of a function of time than price. But yes, with your point overall I agree, like in 10 years or something it doesn't seem workable without major changes. Wasn't that what lightening or side chains were supposed to do? Any way, also, I don't own any crypto and I'm definitely not defending it. Feel free to correct me too if I'm mistaken, anyone.

0x0 5y ago
I guess if the price of BTC goes up, then it makes it more "worth it" to throw more energy at mounting a double-spend attack, and therefore the energy needed to protect the network against such an attack also goes up?
- rjmunro 5y ago
  It's much simpler than that. If the price of BTC goes up, it's worth spending more on electricity to mine it. If 1 coin costs $50,000, and you already own the rig, it's worth spending $49,999 on electricity to mine the next coin and you will make a profit. If you're rig can't do that, you're better off just turning it off.
  - 0x0 5y ago
    Sure, but if the BTC prices rise enough then it is in every transaction recipient's benefit that the network is mining even if there aren't any new coins minted, to avoid a "51% attack" / double spend attack.
- ashtonkem 5y ago
  > I guess if the price of BTC goes up, then it makes it more "worth it" to throw more energy at mounting a double-spend attack Close, but not correct. As the price of BTC goes up, so does the expected reward for mining any given block, making it profitable to spend more electricity in pursuit of the rewards. This results in a net increase in electricity usage as everyone spends more in an attempt to capture the rising value of mining a block successfully. In practice each miner is incentivized to spend an equal amount in electricity per block (at local rates) as the expected reward per block will net them. This results in a 51% attack being inordinately expensive, which was the point of the original design.
  - Dracophoenix 5y ago
    That's one way of looking at it. Another consideration for each miner is to look for cheaper and more abundant energy sources. Despite what the born-again eco-warriors have to say about consumption and the environment, Bitcoin can actually be an incentive for safe energy sources.
    - ashtonkem 5y ago
      > Another consideration for each miner is to look for cheaper and more abundant energy sources And thereby offsetting other inelastic demand for electricity, forcing them to count on non-renewables instead. Bitcoin might be renewable if every single miner pinky swears to turn their rigs off the moment renewables stop over-producing, but come on, nobody believes that'll happen. > Despite what the born-again eco-warriors have to say about consumption and the environment, Bitcoin can actually be an incentive for safe energy sources. Interesting you've got to put an ad hominem in there about people who care about the environment. Probably not a good sign for the second half of this sentence, and it makes me wonder if you're representing other's positions in good faith. Also, oops: https://e360.yale.edu/digest/bitcoin-miners-resurrect-fossil-fuel-power-plant-drawing-backlash-from-environmentalists https://e360.yale.edu/digest/bitcoin-miners-resurrect-fossil... Sure, bitcoin miners will use cheap renewables if they're available. They'll also happily use whatever the hell is available too given the opportunity, since they need to use so much of the stuff. They're particularly notorious for driving up electricity rates locally as they turn previously abundant renewable hydro energy into a over-subscribed resource, requiring towns to import electricity from, yes, fossil fuel plants.
choeger 5y ago
Isn't the difficulty tied to the hash rate?
- lukifer 5y ago
  The difficulty does readjust based on the hashrate; but the hashrate is driven by the cost/benefit analysis of hardware and electricity vs. block rewards, meaning as the asset price goes up, more miners are incentivized to join the network.
pclmulqdq 5y ago
You have it a bit backwards: the energy demand has to do with the price of the coin. You can look at mining calculators to see what the relationship is between kWh and coins today, and some have historical charts. This relationship is baked in to the "difficulty" of the mining function and the block reward - higher difficulty means more hashes per block which means more watts per coin. In turn, your power company charges you per kWh, and in an efficient market, you are going to expand operations until your marginal cost (the cost of power) is equal to marginal profit (profit from selling the coins you mine). Generally, bitcoin mining has been done in such a way that if you have access to power at 5-10c per kWh, you can mine profitably (not including the cost of a mining rig). As the block reward goes down (and it is dropping), the rewards of mining also drop, so you have a reasonable argument that the power use is transitory until the block reward goes to 0. However, it looks like this may end up being made up with transaction fees because the transaction throughput of bitcoin is also really low. Lightning and other solutions are supposed to fix the transaction throughput, but they have limitations.
asimpletune 5y ago
Ah ok, I just looked it up on Wikipedia and understand why I was confused and where the corrections are coming from as well. > Every 2,016 blocks (approximately 14 days given roughly 10 minutes per block), nodes deterministically adjust the difficulty target based on the recent rate of block generation, with the aim of keeping the average time between new blocks at ten minutes. So the changes are made at somewhat predictable paces, in this case roughly every 14 minutes, but the difficulty is adjusted based on demand. In other words, it's a little of both. Demand though will definitely affect the difficulty of the problems, but the demand is only updated every 2,016 blocks.
- ashtonkem 5y ago
  > but the difficulty is adjusted based on demand Only indirectly. More precisely the difficulty is based on supply of hashing power. If more people hash, the blocks will be minted faster and the difficulty will be adjusted higher at the next re-adjustment. It doesn't really matter if those blocks are actually full or empty, and in fact the system would continue to work if most of the blocks were empty and the trading happened off the chain in exchanges. I say indirectly because the amount of hashing power on the chain at any given moment is driven by the expected reward per block minted. Nobody wants to run thirsty machines if the cost of electricity exceeds the expected rewards for successfully minting a block. So the number of machines online and is directly proportional to the value of bitcoin, which is driven by consumer demand.
tiku 5y ago
Why would a bitcoin miner sell his mined BTC for less than the power costs?
- joecool1029 5y ago
  To pay down rising borrowing costs?
  - compsciphd 5y ago
    how? I mined and got $10 in mining rewards. I owe $12 in electricity. what money do I have left over to pay down anything?
immibis 5y ago
If the energy demand is less than the mining reward, you can profitably mine it.

0x0 5y ago

I guess if the price of BTC goes up, then it makes it more "worth it" to throw more energy at mounting a double-spend attack, and therefore the energy needed to protect the network against such an attack also goes up?

rjmunro 5y ago
It's much simpler than that. If the price of BTC goes up, it's worth spending more on electricity to mine it. If 1 coin costs $50,000, and you already own the rig, it's worth spending $49,999 on electricity to mine the next coin and you will make a profit. If you're rig can't do that, you're better off just turning it off.
- 0x0 5y ago
  Sure, but if the BTC prices rise enough then it is in every transaction recipient's benefit that the network is mining even if there aren't any new coins minted, to avoid a "51% attack" / double spend attack.
ashtonkem 5y ago
> I guess if the price of BTC goes up, then it makes it more "worth it" to throw more energy at mounting a double-spend attack Close, but not correct. As the price of BTC goes up, so does the expected reward for mining any given block, making it profitable to spend more electricity in pursuit of the rewards. This results in a net increase in electricity usage as everyone spends more in an attempt to capture the rising value of mining a block successfully. In practice each miner is incentivized to spend an equal amount in electricity per block (at local rates) as the expected reward per block will net them. This results in a 51% attack being inordinately expensive, which was the point of the original design.
- Dracophoenix 5y ago
  That's one way of looking at it. Another consideration for each miner is to look for cheaper and more abundant energy sources. Despite what the born-again eco-warriors have to say about consumption and the environment, Bitcoin can actually be an incentive for safe energy sources.
  - ashtonkem 5y ago
    > Another consideration for each miner is to look for cheaper and more abundant energy sources And thereby offsetting other inelastic demand for electricity, forcing them to count on non-renewables instead. Bitcoin might be renewable if every single miner pinky swears to turn their rigs off the moment renewables stop over-producing, but come on, nobody believes that'll happen. > Despite what the born-again eco-warriors have to say about consumption and the environment, Bitcoin can actually be an incentive for safe energy sources. Interesting you've got to put an ad hominem in there about people who care about the environment. Probably not a good sign for the second half of this sentence, and it makes me wonder if you're representing other's positions in good faith. Also, oops: https://e360.yale.edu/digest/bitcoin-miners-resurrect-fossil-fuel-power-plant-drawing-backlash-from-environmentalists https://e360.yale.edu/digest/bitcoin-miners-resurrect-fossil... Sure, bitcoin miners will use cheap renewables if they're available. They'll also happily use whatever the hell is available too given the opportunity, since they need to use so much of the stuff. They're particularly notorious for driving up electricity rates locally as they turn previously abundant renewable hydro energy into a over-subscribed resource, requiring towns to import electricity from, yes, fossil fuel plants.

choeger 5y ago

Isn't the difficulty tied to the hash rate?

lukifer 5y ago
The difficulty does readjust based on the hashrate; but the hashrate is driven by the cost/benefit analysis of hardware and electricity vs. block rewards, meaning as the asset price goes up, more miners are incentivized to join the network.

pclmulqdq 5y ago

You have it a bit backwards: the energy demand has to do with the price of the coin. You can look at mining calculators to see what the relationship is between kWh and coins today, and some have historical charts. This relationship is baked in to the "difficulty" of the mining function and the block reward - higher difficulty means more hashes per block which means more watts per coin. In turn, your power company charges you per kWh, and in an efficient market, you are going to expand operations until your marginal cost (the cost of power) is equal to marginal profit (profit from selling the coins you mine). Generally, bitcoin mining has been done in such a way that if you have access to power at 5-10c per kWh, you can mine profitably (not including the cost of a mining rig). As the block reward goes down (and it is dropping), the rewards of mining also drop, so you have a reasonable argument that the power use is transitory until the block reward goes to 0. However, it looks like this may end up being made up with transaction fees because the transaction throughput of bitcoin is also really low. Lightning and other solutions are supposed to fix the transaction throughput, but they have limitations.

asimpletune 5y ago

Ah ok, I just looked it up on Wikipedia and understand why I was confused and where the corrections are coming from as well. > Every 2,016 blocks (approximately 14 days given roughly 10 minutes per block), nodes deterministically adjust the difficulty target based on the recent rate of block generation, with the aim of keeping the average time between new blocks at ten minutes. So the changes are made at somewhat predictable paces, in this case roughly every 14 minutes, but the difficulty is adjusted based on demand. In other words, it's a little of both. Demand though will definitely affect the difficulty of the problems, but the demand is only updated every 2,016 blocks.

ashtonkem 5y ago
> but the difficulty is adjusted based on demand Only indirectly. More precisely the difficulty is based on supply of hashing power. If more people hash, the blocks will be minted faster and the difficulty will be adjusted higher at the next re-adjustment. It doesn't really matter if those blocks are actually full or empty, and in fact the system would continue to work if most of the blocks were empty and the trading happened off the chain in exchanges. I say indirectly because the amount of hashing power on the chain at any given moment is driven by the expected reward per block minted. Nobody wants to run thirsty machines if the cost of electricity exceeds the expected rewards for successfully minting a block. So the number of machines online and is directly proportional to the value of bitcoin, which is driven by consumer demand.

tiku 5y ago

Why would a bitcoin miner sell his mined BTC for less than the power costs?

joecool1029 5y ago
To pay down rising borrowing costs?
- compsciphd 5y ago
  how? I mined and got $10 in mining rewards. I owe $12 in electricity. what money do I have left over to pay down anything?

immibis 5y ago

If the energy demand is less than the mining reward, you can profitably mine it.