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Not true at all. If enough hardware is available, pool only expands until reward covers electricity cost plus small margin. I.e. bitcoin mining electricity-cost
by vl 5y ago
Not true at all. If enough hardware is available, pool only expands until reward covers electricity cost plus small margin. I.e. bitcoin mining electricity-cost bound for the long time now.
- eru 5y agoElectricity costs plus cost of capital (etc).
- paulmd 5y agoin practice that's not even true because some miners are willing to run negative margins because they extract value elsewhere in the process (the most prominent example is stolen electricity, but also for many miners it's a form of cash laundering. You always get less money out than you put in, but it's clean cash. In China's case they can't get money past capital controls, but you can mine at a loss and sell the bitcoins in a jurisdiction of your choice, that's worth something to them. Also, many miners are front-running exchange trades or extracting other forms of economic value.)
- eru 5y agoInteresting. How does running a mining operation help you front-run exchange trades?
- paulmd 5y agostandard front-running stuff. you can see the transactions that are in the mempool, you can either submit your own higher-fee transaction (likely to be included before theirs) or if you're a miner you can try to mine blocks with your transaction included and theirs specifically excluded so that yours goes first. that essentially tells you that the price is about to go up or down, so you can make money on the movement. https://cointelegraph.com/news/front-running-flash-bots-and-keeping-things-fair-in-the-crypto-market https://cointelegraph.com/news/front-running-flash-bots-and-... https://coinmarketcap.com/alexandria/glossary/miner-extractable-value-mev https://coinmarketcap.com/alexandria/glossary/miner-extracta...
- eru 5y agoThanks. Most of what you suggest doesn't benefit from having significant mining capacity yourself. (Though one thing does.)