5 ms·

> The amount of electricity needed to protect the network is directly tied to the price of BTC This is not how proof of work functions. Hash rate and price are

> The amount of electricity needed to protect the network is directly tied to the price of BTC This is not how proof of work functions. Hash rate and price are not directly related, they are somewhat correlated because when the price goes up it becomes more profitable to mine. Bitcoin doesn't need more hash rate for the price to go up - the price is the independent variable and the hash rate is the dependent variable.

tobrien6 5y ago
Truth. Parent comment is deeply misinformed. BTC already has more than enough hash rate, and it is entirely independent of price.
- hn_throwaway_99 5y ago
  That does not make sense. The whole point of proof of work is that it is proof that someone has spent the value in electricity validating a block. As the price of bitcoin rises, naturally more and more miners will beef up their rigs (that is, spend more money in infrastructure and electricity) to mine BTC, because the rewards and fees are worth more. Note if they didn't do this, anyone could easily have a "free money" arbitrage play, and basic economics says that discrepancy in prices (i.e. the value of a BTC on the market and the cost to mine one) must be arbitraged away. Think of it this way, if hash rate is independent of price, why does it take the electricity output of Argentina to run the network? It certainly didn't take that much years ago. The reason being that as BTC becomes more valuable there is more reward and thus more competition for miners to mine. As that happens, the hash rate will rise as more power is added to the network.
piva00 5y ago
Not directly related but not "somewhat" correlated either, it's deeply correlated exactly due to profitability, a point you actually mention but somehow don't consider a deep correlation.
- zarzavat 5y ago
  Mining profitability is subject to conditions besides the price of a Bitcoin, for example: energy prices, block reward changes, regulation, hardware availability and pricing, etc. It's really not as simple as hash rate = price. It's more so that they are correlated in direction of change.

tobrien6 5y ago

Truth. Parent comment is deeply misinformed. BTC already has more than enough hash rate, and it is entirely independent of price.

hn_throwaway_99 5y ago
That does not make sense. The whole point of proof of work is that it is proof that someone has spent the value in electricity validating a block. As the price of bitcoin rises, naturally more and more miners will beef up their rigs (that is, spend more money in infrastructure and electricity) to mine BTC, because the rewards and fees are worth more. Note if they didn't do this, anyone could easily have a "free money" arbitrage play, and basic economics says that discrepancy in prices (i.e. the value of a BTC on the market and the cost to mine one) must be arbitraged away. Think of it this way, if hash rate is independent of price, why does it take the electricity output of Argentina to run the network? It certainly didn't take that much years ago. The reason being that as BTC becomes more valuable there is more reward and thus more competition for miners to mine. As that happens, the hash rate will rise as more power is added to the network.

piva00 5y ago

Not directly related but not "somewhat" correlated either, it's deeply correlated exactly due to profitability, a point you actually mention but somehow don't consider a deep correlation.

zarzavat 5y ago
Mining profitability is subject to conditions besides the price of a Bitcoin, for example: energy prices, block reward changes, regulation, hardware availability and pricing, etc. It's really not as simple as hash rate = price. It's more so that they are correlated in direction of change.