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> Nothing else is remotely able to handle the hashpower without crashing the price of the coin. You fundamentally misunderstand how mining works. Difficulty au

> Nothing else is remotely able to handle the hashpower without crashing the price of the coin. You fundamentally misunderstand how mining works. Difficulty automatically increases if blocks are being mined at faster than the expected rate. Needing more GPUs to mine the same number of coins raises the price.

jallen_dot_dev 5y ago
> Needing more GPUs to mine the same number of coins raises the price. Ridiculous. Price is determined by how much people are willing to buy or sell it at, which they decide based on speculation. The amount of GPUs that will be put to the task of mining is dependent on price. Not the other way around. I could create an alt coin that requires some arbitrarily large number of hashes to mine a single block and receive 1 coin as reward. Yet I cannot command a higher price for it, because no one wants to buy my coin.
- dataangel 5y ago
  Miners will only sell at prices that cover their costs. Yes you need demand too, but it's a question of equilibrium. If demand is high, price will go up, attracting more miners. But if the cost of energy/gpus goes up, miners won't be willing to sell for the same price as before, which will also increase the price.
CyberDildonics 5y ago
You have two things very wrong here. First, you are ignoring that difficulty adjustments can happen downward too. Second, you flipped the actually dynamic - the price swings dictate how much mining ends up being profitable, not the other way around. You might have also confused the difficulty adjustments with the reward decreasing over time.
- dataangel 5y ago
  No I meant difficulty adjustment and I know they can also adjust now. What's being missed here is that price go up because of buyer AND seller behavior. The dynamic goes both ways. If there is a demand increase, price goes up, so miners mine more. But if costs for miners go up, they won't sell for less than their costs, so that also causes the price to go up.
tgsovlerkhgsel 5y ago
The total hashpower of a coin adjusts to the point where the total cost to deliver that hashpower is just below the total mining reward. Thus, a coin that issues $50k worth of coin per day will have $50k/day worth of hash power. If difficulty goes above that, mining becomes unprofitable.
- dataangel 5y ago
  That's correct, that's the kind of equilibrium that should be reached. I'm just pointing out that price increases can find from supplier costs going up, not just from increased demand.

jallen_dot_dev 5y ago

> Needing more GPUs to mine the same number of coins raises the price. Ridiculous. Price is determined by how much people are willing to buy or sell it at, which they decide based on speculation. The amount of GPUs that will be put to the task of mining is dependent on price. Not the other way around. I could create an alt coin that requires some arbitrarily large number of hashes to mine a single block and receive 1 coin as reward. Yet I cannot command a higher price for it, because no one wants to buy my coin.

dataangel 5y ago
Miners will only sell at prices that cover their costs. Yes you need demand too, but it's a question of equilibrium. If demand is high, price will go up, attracting more miners. But if the cost of energy/gpus goes up, miners won't be willing to sell for the same price as before, which will also increase the price.

CyberDildonics 5y ago

You have two things very wrong here. First, you are ignoring that difficulty adjustments can happen downward too. Second, you flipped the actually dynamic - the price swings dictate how much mining ends up being profitable, not the other way around. You might have also confused the difficulty adjustments with the reward decreasing over time.

dataangel 5y ago
No I meant difficulty adjustment and I know they can also adjust now. What's being missed here is that price go up because of buyer AND seller behavior. The dynamic goes both ways. If there is a demand increase, price goes up, so miners mine more. But if costs for miners go up, they won't sell for less than their costs, so that also causes the price to go up.

tgsovlerkhgsel 5y ago

The total hashpower of a coin adjusts to the point where the total cost to deliver that hashpower is just below the total mining reward. Thus, a coin that issues $50k worth of coin per day will have $50k/day worth of hash power. If difficulty goes above that, mining becomes unprofitable.

dataangel 5y ago
That's correct, that's the kind of equilibrium that should be reached. I'm just pointing out that price increases can find from supplier costs going up, not just from increased demand.