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Bitcoin mining becomes unprofitable as BTC price falls to average cost of mining

351 points by lakis 4y ago

RantyDave 4y ago
Environment breathes a sigh of relief.
- rs_rs_rs_rs_rs 4y ago
  Certainly not a fan of crypto currencies since I don't see any good use in them but how come you only see comments like these in a crypto currency thread and not in a, lets say, computer games one? Games certainly are more wasteful and as useless as crypto currencies are.
  - croes 4y ago
    Games have an positive impact on the gamer relaxation. I wouldn't call that useless.
    - rs_rs_rs_rs_rs 4y ago
      And crypto does not have a positive impact on people "playing" crypto?
      - wiseowise 4y ago
        Sure, just as gambling does. You should compare energy usage of Bitcoin to gambling, not gaming.
      - speedgoose 4y ago
        Isn’t it a zero sum? If one wins money, one lose some.
      - croes 4y ago
        You can still be relaxed after losing a game, after losing crypto not so much.
      - fragmede 4y ago
        Sure but the energy expenditure per-person isn't balanced per person for crypto, it's balanced to the amount of energy and money willing to be spent on the thing. If I "enjoy" crypto to the tune of a $1 million dollar server farm, that'll burn ridiculously electricity than the biggest possible monitor and the most powerful GPU available to power one computer for one gamer's enjoyment.
    - tasuki 4y ago
      From my personal experience, playing computer games is a dopamine hit, but they don't result in me feeling particularly relaxed afterwards - often I'd play too long and feel tired, a kind of a hangover.
      - latexr 4y ago
        Try a different style of game. One which doesn’t reward stress. Alto’s Adventure added a zen mode so it would be even more relaxing to those who are playing it to chill: https://www.theverge.com/2016/6/1/11785058/altos-adventure-zen-mode-photo-mobile-snowboarding-game https://www.theverge.com/2016/6/1/11785058/altos-adventure-z...
  - hailwren 4y ago
    The environment claim is total bs. Crypto uses 0.5% of global energy supply. It's beaten by things such as residential television use, and only the wasted light from outdoor lighting (0.85%). It's also the only time that people try to blame an energy consumer for the sins of energy producers. The environmental damage of energy is caused by coal plants, not how many people are watching the simpsons at the same time.
    - wiseowise 4y ago
      > It's beaten by things such as residential television use, and only the wasted light from outdoor lighting (0.85%). TV usage is a contribution of billions of people. Same with outdoor lighting. Both are necessary, unlike Bitcoin.
      - hailwren 4y ago
        No, it's not outdoor lighting @ 0.85%. It's only the waste from outdoor lighting. Outdoor lighting is far higher. [1] But now we're playing a game where you tell me the thing you like and the things you don't like and I can either present a counterargument of things I like and don't like and we can both get mad that we have different preferences... Or, we can design a system that allows people to have different preferences without trying to regulate our preferences on each other. The math: (residential power %)(lighting %)(lighting % wasted) (21)(.13)(.35) = 0.9555% (oh, it was higher than I remembered) 1 - https://www.darksky.org/light-pollution/energy-waste/#:~:text=IDA%20estimates%20that%20least%2030,plant%20875%20million%20trees%20annually https://www.darksky.org/light-pollution/energy-waste/#:~:tex....
        Aunche 4y ago
        "Mostly by lights that aren't shielded." Overall, the lighting is still necessary, it's just not as efficient as it could be. By that standard, over 99% of Bitcoin mining is waste because because most of the power goes into solving artificial difficulty. The only people who genuinely care about PoW are miners and a handful of enthusiasts. I'll generously estimate that 1 million people fall into this category. So you have a million people using .5% of the world's electricity just for one of their interests. Contrast that with the billions of people who enjoy videogames or outdoor lighting.
  - aaronbrethorst 4y ago
    Video games don’t consume as much electricity as modern western countries.
  - wiseowise 4y ago
    You can make the same argument about any type of entertainment. It won't make it less invalid, though. Games are entertainment, and average gamer certainly doesn't consume electricity on a scale of Bitcoin farm 24/7.
    - yieldcrv 4y ago
      Neither does any single bitcoin user? Miners should be compared to data centers, like those massive ones powering cloud games?
      - wiseowise 4y ago
        > Miners should be compared to data centers, like those massive ones powering cloud games? Data centers host more than cloud games.
        yieldcrv 4y ago
        Which you consider a rebuttal because…? Its fairly useless as solely an observation, mining farms often also do other things with byproducts, so even if the crux of this conversation relies on a futile effort of comparing relative utility of "entertainment" or "bitcoin", it would be inaccurate either way
      - pred_ 4y ago
        If there were no users, presumably there would be no network (at least if "users" include people who are in it for the financial speculation), so it is meaningful to attribute energy usage to users. But how to quantify that? One reasonable approach that shows up a lot is to say that usage is making transactions, and just consider the energy usage of all transactions to be that of the entire network (since mining exists to add credibility to transactions). Then estimates will say that on average, any transaction uses more than 1 MWh of electricity.
        yieldcrv 4y ago
        All of those presumptions are wrong. The network uses the same amount of energy whether a block has transactions or not. Surely you see how that would actually help your “I hate energy use” argument if you actually made that one. Your argument is a common argument though, its incompatible with the more accurate argument. Secondly, trading for speculation occurs offchain, meaning most speculators are not transacting on the network.
  - pkulak 4y ago
    I’m not going to do the math, but mining probably uses several orders of magnitude more electricity than gaming. And one is art and entertainment. I don’t even know how to respond here…
    - rs_rs_rs_rs_rs 4y ago
      >And one is art and entertainment This does not give you a pass for being wasteful.
      - nicbou 4y ago
        It's not wasteful. The energy is used for something, not deliberately wasted.
  - beAbU 4y ago
    Video games are entertainment. Are you suggesting we shut down tv, radio, theatre, movies, theme parks, tourism because they are all wasteful and useless?
    - rs_rs_rs_rs_rs 4y ago
      Well if we're trying to save the environment and make a better life for future inhabitants of this planet why not shut down all of these? Why shut down just crypto currencies?
      - fragmede 4y ago
        Because video games scale with the number of human beings (with access to that technology). Even the most dedicated gamer can only play so much video game at a time. Cryptocurrency, however, scales to globally available power and cost. Because of the inherent competition between mining pools, the amount of electricity dedicated to mining just grows and grows.
  - TheDong 4y ago
    Plenty of things with "no value" use electricity, but these other things don't use electricity in an adversarial way related to it's monetary cost. Let's take the example of video games: bitcoin uses about 150TWh of electricity. From EIA.gov's stats, it looks like residential computer usage is estimated at 36 TWh across the usa (2.4% of residential usage, 1.5T kWh residential [0]). Let's assume all residential computer usage is video games, so it's using a nice 1/4th bitcoin. So, what's different about these uses? Well, let's say that we manage to make electricity 5 times cheaper by, say, building a fusion reactor or a ton of solar panels. In that scenario, those computers playing video games still use the same amount of electricity, and their power bill goes down. Not a problem for computers/games. However, if the price of electricity goes down, that's actually a problem for bitcoin. Bitcoin is using 150TWh of electricity, which sorta means to perform a 51% attack, you need 75TWh of electricity (I know, it's more complicated than that). Now that electricity is 5 times cheaper, cool, someone can attack bitcoin for 5 times cheaper right? Well, we can't have that, so bitcoin now has to use 750TWh to have the same security it had before. The same thing happens for improvements to ASICs or any other improvements pretty much. If bitcoin is cheaper to mine, that just means more mining happens and the cost of mining stabilizes back out. On the other hand, if a game can be optimized to take less electricity, or use fewer servers, of course that'll happen. Like in almost any venture, accomplishing the same work for cheaper is good when it comes to video games. That is the difference I see. Crypto isn't just wasteful, it's adversarial to the point where it resists improvement. If we reached some energy utopia where electricity could fulfill 100% of all non-crypto uses on the planet at no meaningful cost, bitcoin would have to use so much energy that electricity still couldn't be free, or else it could be attacked with the free electricity. I cannot think of any other use of electricity that has this adversarial property. [0]: https://www.eia.gov/energyexplained/electricity/use-of-electricity.php https://www.eia.gov/energyexplained/electricity/use-of-elect...
    - hapticmonkey 4y ago
      You need more than just access to electricity to mine. You need the hardware, somewhere to run and maintain it, as well as the whole supply chain leading back to chip fabrication. These are all limited. You'd need a multi hundred-billion dollar covert operation to do all of that and it would take years to build.
  - baby 4y ago
    Because it's not a cryptocurrency issue, it's a bitcoin issue. Most cryptocurrencies are green.
    - chx 4y ago
      Please elaborate how "most" cryptocurrencies are green.
      - baby 4y ago
        They don’t use proof of work, they’re similar to distributed database protocols
  - jayd16 4y ago
    Maybe you don't like games but in what sense are they "more wasteful"? By what measure? Crypto is considered wasteful because you can compare it to cheaper, more traditional means of exchange. Games are entertainment or art that you can't really quantify in the same way. People enjoy the games themselves, not for any utilitarian purpose.
  - teapowered 4y ago
    crypto is the only game where the person who burns the most coal wins
  - TomSwirly 4y ago
    Because computer games do not consume 1% of the world's electric power. Because computer games give entertainment to three billion people. Because no one pretends that their computer games are going to overthrow the world's economic systems, and then try to sell them to some greater fool for much more money.
  - irusensei 4y ago
    Not yet. I expect gaming and high end personal computing to be targeted sooner or later by the ever moving goalpost of environmental activism. Maybe in a dark timeline triple A gaming might be only available from cloud desktops as a service from licensed ESG and DRM friendly cloud providers. Crunching numbers and cryptographic calculations being a ToS violation. So I’m not a big fan of having people often with obvious hysterical political bias dictating what I do with the equipment and energy I paid for. This goes the same for mining or gaming. The idea that rendering realistic grass is okay but not SHA256 hashes is preposterous and borderline medieval. I’d say if there is a concern about energy usage please price it accordingly.
  - pnt12 4y ago
    One is not like the other. Art and entertainment are not useless to society, just because they don't have a utilitarian aspect. You can see that millions of people enjoy art/entertainment in some form and pay for it. There are also big scams like predatory IP enforcement and micro transactions, which we should fight against. Cryptocurrencies were a revolutionary idea which has mostly resulted in crap results. Scams and random ware are rampant. Transactions are slow and expensive, unless you centralize them and lose all advantages of a decentralized platform. The environment pays huge costs with PoW, and PoS is always mentioned but never implemented by any of the big players. Also contributed to a shortage of chips and GPUs which affected the rest of the world. So no, one is not like the other.
- baby 4y ago
  Can't wait for Bitcoin to move to PoS
dotcoma 4y ago
So, will all this wasted effort be redirected towards something useful at last?
- wmf 4y ago
  Nah, it'll be used for "Uber for X in the metaverse".
  - kristopolous 4y ago
    Hopefully with interest rates rising less stupid money will be available and we can reorient efforts towards things of values and needs. You know if we collectively insist on it. We gotta all say no to bullshit somehow.
    - nightski 4y ago
      Yeah I said no to Google & Facebook a long time ago.
- viraptor 4y ago
  Don't expect it. There's always some get-rich-quick scheme, or another research-this-investment idea. Something always fills the void. Bitcoin is just one of the biggest we've seen since everyone and their dog were buying shares / penny stocks.
  - thomasz 4y ago
    Most pyramid schemes do not require massive amounts of energy.
    - wiseowise 4y ago
      That's what gives this scam substance. Easy to dismiss with "iT iS bAcKed bY eLeCtRiCiTy sPeNt".
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anigbrowl 4y ago
01100011 4y ago
As a miner, do you get to chose which transactions you mine? i.e. as the mining pool dries up(why run a rig if you're losing money), can whales sponsor miners to give their transactions priority, giving them superior liquidity to smaller bagholders?
- 3np 4y ago
  Yes.
- pavitheran 4y ago
  Yes anyone sending a transaction can choose to set a higher fee rate to get their transaction prioritized to be included in the chain. The miners will try to include transactions that will pay them the highest fees in the next block.
- Volker_W 4y ago
  > As a miner, do you get to chose which transactions you mine? Yes, the mining pool can chose.
- hackernudes 4y ago
  Miners do choose. Giving transactions priority is called the "transaction fee" (am I missing something here?). In addition to that, there are out-of-band services called "transaction accelerators" that work directly with miners, but that is really only useful to bump up the priority of an existing slow/stuck transaction.
ec109685 4y ago
This seems like a temporary problem given the difficulty adjusts? https://news.bitcoin.com/bitcoins-sinking-price-pushes-hashrate-below-200-exahash-mining-difficulty-expected-to-slide-2-8-lower/ https://news.bitcoin.com/bitcoins-sinking-price-pushes-hashr...
- mlyle 4y ago
  It's a market. As bitcoin goes down, amount supplied of mining/hashing goes down. Difficulty adjusts downward which shifts the supply curve a little, but nowhere near enough to make it worth it to all the miners who mined before. A few percent change in difficulty doesn't make a 50% drop in bitcoin all better.
- DeathArrow 4y ago
  The used market is flooded with ASICS and GPUs so it seems the adjustment isn't working well. Also, many large miners didn't sell their coins and instead they borrowed real money to expand and fund their new mining operations. As the interest rates are climbing and crypto prices are going down, that's not possible any more.
  - RL_Quine 4y ago
    Nobody has used a GPU to mine Bitcoin in a decade now.
    - sumy23 4y ago
      GPUs are used for eth. There is clearly a broad downturn in the mining sector.
      - RL_Quine 4y ago
        Ethereum is mostly mined using custom hardware, it's not graphics cards really, certainly nothing you could re-sell to anybody who expects to play Bioshock or whatever. Very small operations are people buying and using actual consumer GPUs, but they tend to be absolutely destroyed by the process and then sold to unwitting buyers. I've sorted through literal milk crates of GPUs before to find a single one which could reliably display a video output after they had been used in a mining operation.
baskethead 4y ago
I think it's only unprofitable in the US. Since China has banned mining, the US has become the country with the largest share of miners, and now as the price drops, mining will simply move to countries with lower costs of electricity.
- agrover 4y ago
  Why wasn't it there already?
  - kayamon 4y ago
    Due to the ongoing events in the eastern Europe area, there's quite a lot of people who might have energy they'd like to sell/use for something, but can't necessarily sell it to whom they might like to. If there's a way they can sell it to the Bitcoiners, even at a price they might not like to, they might do that.
- bushbaba 4y ago
  Which would be? I’m not sure there’s much cheaper electric costs.
  - fosk 4y ago
    Probably a country with cold weather (free air conditioning) and cheap access to natural oil and gas reserves.
thematrixturtle 4y ago
It's a self-correcting equilibrium though, since the block difficulty is tied to the hashrate, which will fall as miners pull out. That said, the hashrate is not showing major drops yet: https://www.blockchain.com/charts/hash-rate https://www.blockchain.com/charts/hash-rate
- MengerSponge 4y ago
  If they're either using subsidized or pirated electricity, and their hardware is paid for, why would miners pull out?
  - DeathArrow 4y ago
    Basically you assume miners mine for free.
  - RL_Quine 4y ago
    You don't have to do anything dodgy to get power at an unbelievably low cost, even in north america bulk rates are a couple of cents per kilowatt hour if you know where to look, and in some cases you can even be paid to use power due to politics. You can also be mining at a loss and have it be completely rational, because it is less of a loss than turning it off and writing off the equipment. The economics are very non intuitive for people who aren't exposed to the industry.
    - edmundsauto 4y ago
      What is the situation where people are being paid to sustainably consume power? Genuinely curious - seems like a ripe arb situation so I’m curious why it isn’t being taken advantage of.
      - pmorici 4y ago
        People using flair gas from oil wells for example to power a generator. The alternative is just burning the gas.
rubatuga 4y ago
This has happened so many times, that it's not really news.
- arinlen 4y ago
  > This has happened so many times, that it's not really news. Did it, though? Coindesk shows BTC right now trading at 18100$, way down from it's 2-month peak of 32k and year-peak of 66k. This means that in less than a year BTC tanked to 27% of its peak year value, and it's tanking even further. When was the last time you saw BTC lose 48k in value?
  - rubatuga 4y ago
    When I saw bitcoin tank from 1000 to 500, it's all a matter of scale.
    - Izkata 4y ago
      I first got interested right around the Mt. Gox implosion, when it went something like 1200 -> 300.
  - mattwilsonn888 4y ago
    > When was the last time you saw BTC lose 48k in value? Not using proportions is pure sensationalist nonsense. >50% drawdowns have happened several times in Bitcoin. So tell us again how this time is different.
    - croes 4y ago
      Using proportions is misleading. The reasons for drop from 1000 to 500 are different from those for a drop from 60,000 to 30,000.
    - onion2k 4y ago
      The absolute amount matters as well though. It's easy to imagine something that dropped from 1000 to 500 returning to 1000. That's a small rise in value, and if you believe the currency is really a currency you can imagine a "$1000 coin" being useful. Its harder to imagine a currency or a stock that fall $30000 returning to $60000. It might be the same percentage, but it's not the same in terms of psychology.
sloan 4y ago
Good. The world definitely does not need more wasteful bitcoin mining.
- hossbeast 4y ago
  Do you think the world could benefit from money that can't be manipulated by governments? If so, is it worth some expenditure of energy?
  - EdwardDiego 4y ago
    It's being manipulated by private entities, so, I'm not really sure it's an improvement.
    - fsflover 4y ago
      Just like the government itself?
      - EdwardDiego 4y ago
        Governments are far more answerable to average citizens than the people behind Tether or the whales currently, even if government isn't ideally accountable. Also, governments have reasonable incentives to keep currencies at levels that maintain economic conditions. Being voted out or overthrown are consequences of economic mismanagement. I've yet to see that from Tether.
        smokey_circles 4y ago
        > I've yet to see that from Tether The wheels of bureaucracy turn slowly, it's no different with any other financial scandal.
        EdwardDiego 4y ago
        True, but the fact that government regulation is needed kinda voids the argument that crypto currencies are great because they can't be manipulated by the government like a fiat currency.
addicted 4y ago
Here’s what I don’t understand. I’m genuinely looking for an explanation for this. Let’s assume everything works great for BTC. BTC is designed to eventually max out the number of coins. I believe the current expectation is that no more coins will be issued by 2040. What happens after that? If no more coins are issued, there’s no incentive to mine. And if there is no more mining then there will be no more transactions. Will the BTC blockchain just freeze at that point? If so why will it have any value any more? I’m not sure what the ideal expectations are beyond this scenario.
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- bawolff 4y ago
  There are still transaction fees to encourage mining. If you are interested in more detail, the original bitcoin paper goes in detail and is decently well written and much more straight forward to read then most people probably expect.
  - thrtythreeforty 4y ago
    A lack of block rewards will incentivize all kinds of bad miner behavior: https://economics.princeton.edu/working-papers/on-the-instability-of-bitcoin-without-the-block-reward/ https://economics.princeton.edu/working-papers/on-the-instab... A nice quote: > ... we are able to prove that an equilibrium exists. However, it is one where miners include only a fraction of available transactions into their blocks. This results in a backlog of transactions whose size grows indefinitely with time.
    - bawolff 4y ago
      I agree that the game theory arguments about it all working out become much more hand wavey once rewards decline, but on the face of it, i don't neccesarily think not all transactions being processed is a problem (just retry with a higher transaction fee)
etaioinshrdlu 4y ago
It's not really serious unless transaction fees need to spike massively to compensate, otherwise like others noted, difficulty adjustments will handle to problem just fine.
deleted 4y ago
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throwaway4good 4y ago
How is "average cost of mining" calculated / assessed? (Following the link just leads to some random tweet). It would be heavily dependent on the equipment used and the price of electricity which would vary a lot by location. And meaningfully it could be split in two: A fixed cost that is still there if the mining stops and a variable cost. And miners would be expected (short term at least) to continue mining until the price hit the variable cost which, in cases where excess free energy is used, is probably very low.
- latchkey 4y ago
  Pretty simple really. Capex and Opex. How much does it cost to set things up and how much does it cost to run things. In large scale deployments, like what I run, we colocate in existing datacenter space and they just charge us a flat power fee, which includes everything on their end. At scale, the costs to mine are FAR lower than the existing drops in the market. Articles like this are quite wrong... it is only unprofitable for smaller miners.
  - throwaway4good 4y ago
    Yes. Where do they get this number from? How is it calculated?
    - latchkey 4y ago
      What number?
      - throwaway4good 4y ago
        That the average mining cost is about 19k pr Bitcoin.
        latchkey 4y ago
        On a large scale, it is more like 7-9k. https://twitter.com/OhGodAGirl/status/1538318604847882240 https://twitter.com/OhGodAGirl/status/1538318604847882240
arisAlexis 4y ago
It was profitable at $1 and it will remain profitable because of the difficulty adjustment. This is tge second uninformed post in 2 days, the other didnt get many upvotes. Who is writing all these fake news? Edit: read up on pow before downvoting facts.
extant_lifeform 4y ago
GPUs shall be available again, REJOICE!!!
- oaththrowaway 4y ago
  Bitcoin is mined with ASICs, not GPUs
  - Elinvynia 4y ago
    Still, the price of Bitcoin can have (and has had!) serious effects on the entire crypto ecosystem.
la_fayette 4y ago
Many people consider bitcoin as an investment, so it would not surprise me, that miners will do work if cost is higher than current bitcoin price.
yieldcrv 4y ago
As several people already wrote, difficulty adjusts. Are people playing devil’s advocate just for the sake of a rebuttal, or do you all really believe this “time is different”. Its not different enough to me. The macro environment’s influence isn't different enough to observe that the network still functions at a lower hashrate and a lower price. The best conversation is regarding the difficulty algorithm as bitcoin’s is the oldest one and no other community has used it since 2011.
labrador 4y ago
I'm trying to imagine how many days I would lose money mining in hopes of helping establish equilibrium. I can't imagine miners are very altruistic. I can also imagine many of them deciding the party is over and selling their valuable hardware. I don't have a clue what happens when nobody wants to mine it.
- rag-hav 4y ago
  The hardware would sell for a loss. But if they eat losses for 2 weeks, they could continue to extract profit from their hardware.
Aeolun 4y ago
Yes! Maybe I’ll finally be able to buy a new graphics card without spending an arm and a leg then…
irusensei 4y ago
Didn’t bitcoin survived the chinese crackdown on mining that yanked ~25%-ish of its hashrate overnight?
- capableweb 4y ago
  Biggest drop in hash-rate was in May/June 2021 when it dropped ~60% or something like that (https://www.blockchain.com/charts/hash-rate https://www.blockchain.com/charts/hash-rate), but yes, it did survive that (as the network is still running, online and working as it should). The all-time high of hash-rate for Bitcoin was in May this year.
usr1106 4y ago
Assume for a moment that the graph in the article is trustworthy. Then mining has been highly profitable for quite a while now and is now getting unprofitable. It has been unprofitable before. That's the same as in every busines: There can be periods of unprofitability. That does not mean that such business will die out completely. Especially after a phase of high profits there are buffers and there will be hope that profits will return. The question is how that graph is created. The mining costs are not the same for everybody. Probably some electricity used for mining is not paid for at market prices. (Including some might not be paid for at all) And even if it were, market prices (after subsidies and taxes) vary proably quite a bit over places where mining is happening.
dzdt 4y ago
There is a serious problem that is not much discussed. Bitcoin is susceptible to a 51% hash rate double-spend attack. As Bitcoin has grown, this has never been a practical issue. No miner or consortium has had that much hash-rate compared to the rest of the market. But when the hashrate drops below 50% of its previous maximum, that means that there are idle mining resources enough to carry out the attack. And owners of those resources may not mind throwing the whole Bitcoin system into chaos if they can get one last big payday. The lower the active hashrate grows, the smaller the consortium required to make an attack. So watch for chain forks and double-spend attacks. Maybe not this month or this year, but my expectation is it will be part of the eventual Bitcoin downward spiral.
- QuantumGood 4y ago
  In some sense bottom buyers wait for the worst news possible, and then calculate if the financial object can go to zero. This sounds like it might be the kind of news those kind of buyers would be waiting for.
Blackstone4 4y ago
Risk of a negative spiral if this continues and energy prices remain high…
sbarbarian 4y ago
hot take: it seems everything about crypto is full of problems invented for their own sake.
slantaclaus 4y ago
Unless you generate your own power, I assume

351 points by lakis 4y ago

RantyDave 4y ago

Environment breathes a sigh of relief.

rs_rs_rs_rs_rs 4y ago
Certainly not a fan of crypto currencies since I don't see any good use in them but how come you only see comments like these in a crypto currency thread and not in a, lets say, computer games one? Games certainly are more wasteful and as useless as crypto currencies are.
- croes 4y ago
  Games have an positive impact on the gamer relaxation. I wouldn't call that useless.
  - rs_rs_rs_rs_rs 4y ago
    And crypto does not have a positive impact on people "playing" crypto?
    - wiseowise 4y ago
      Sure, just as gambling does. You should compare energy usage of Bitcoin to gambling, not gaming.
    - speedgoose 4y ago
      Isn’t it a zero sum? If one wins money, one lose some.
    - croes 4y ago
      You can still be relaxed after losing a game, after losing crypto not so much.
    - fragmede 4y ago
      Sure but the energy expenditure per-person isn't balanced per person for crypto, it's balanced to the amount of energy and money willing to be spent on the thing. If I "enjoy" crypto to the tune of a $1 million dollar server farm, that'll burn ridiculously electricity than the biggest possible monitor and the most powerful GPU available to power one computer for one gamer's enjoyment.
  - tasuki 4y ago
    From my personal experience, playing computer games is a dopamine hit, but they don't result in me feeling particularly relaxed afterwards - often I'd play too long and feel tired, a kind of a hangover.
    - latexr 4y ago
      Try a different style of game. One which doesn’t reward stress. Alto’s Adventure added a zen mode so it would be even more relaxing to those who are playing it to chill: https://www.theverge.com/2016/6/1/11785058/altos-adventure-zen-mode-photo-mobile-snowboarding-game https://www.theverge.com/2016/6/1/11785058/altos-adventure-z...
- hailwren 4y ago
  The environment claim is total bs. Crypto uses 0.5% of global energy supply. It's beaten by things such as residential television use, and only the wasted light from outdoor lighting (0.85%). It's also the only time that people try to blame an energy consumer for the sins of energy producers. The environmental damage of energy is caused by coal plants, not how many people are watching the simpsons at the same time.
  - wiseowise 4y ago
    > It's beaten by things such as residential television use, and only the wasted light from outdoor lighting (0.85%). TV usage is a contribution of billions of people. Same with outdoor lighting. Both are necessary, unlike Bitcoin.
    - hailwren 4y ago
      No, it's not outdoor lighting @ 0.85%. It's only the waste from outdoor lighting. Outdoor lighting is far higher. [1] But now we're playing a game where you tell me the thing you like and the things you don't like and I can either present a counterargument of things I like and don't like and we can both get mad that we have different preferences... Or, we can design a system that allows people to have different preferences without trying to regulate our preferences on each other. The math: (residential power %)(lighting %)(lighting % wasted) (21)(.13)(.35) = 0.9555% (oh, it was higher than I remembered) 1 - https://www.darksky.org/light-pollution/energy-waste/#:~:text=IDA%20estimates%20that%20least%2030,plant%20875%20million%20trees%20annually https://www.darksky.org/light-pollution/energy-waste/#:~:tex....
      - Aunche 4y ago
        "Mostly by lights that aren't shielded." Overall, the lighting is still necessary, it's just not as efficient as it could be. By that standard, over 99% of Bitcoin mining is waste because because most of the power goes into solving artificial difficulty. The only people who genuinely care about PoW are miners and a handful of enthusiasts. I'll generously estimate that 1 million people fall into this category. So you have a million people using .5% of the world's electricity just for one of their interests. Contrast that with the billions of people who enjoy videogames or outdoor lighting.
- aaronbrethorst 4y ago
  Video games don’t consume as much electricity as modern western countries.
- wiseowise 4y ago
  You can make the same argument about any type of entertainment. It won't make it less invalid, though. Games are entertainment, and average gamer certainly doesn't consume electricity on a scale of Bitcoin farm 24/7.
  - yieldcrv 4y ago
    Neither does any single bitcoin user? Miners should be compared to data centers, like those massive ones powering cloud games?
    - wiseowise 4y ago
      > Miners should be compared to data centers, like those massive ones powering cloud games? Data centers host more than cloud games.
      - yieldcrv 4y ago
        Which you consider a rebuttal because…? Its fairly useless as solely an observation, mining farms often also do other things with byproducts, so even if the crux of this conversation relies on a futile effort of comparing relative utility of "entertainment" or "bitcoin", it would be inaccurate either way
    - pred_ 4y ago
      If there were no users, presumably there would be no network (at least if "users" include people who are in it for the financial speculation), so it is meaningful to attribute energy usage to users. But how to quantify that? One reasonable approach that shows up a lot is to say that usage is making transactions, and just consider the energy usage of all transactions to be that of the entire network (since mining exists to add credibility to transactions). Then estimates will say that on average, any transaction uses more than 1 MWh of electricity.
      - yieldcrv 4y ago
        All of those presumptions are wrong. The network uses the same amount of energy whether a block has transactions or not. Surely you see how that would actually help your “I hate energy use” argument if you actually made that one. Your argument is a common argument though, its incompatible with the more accurate argument. Secondly, trading for speculation occurs offchain, meaning most speculators are not transacting on the network.
- pkulak 4y ago
  I’m not going to do the math, but mining probably uses several orders of magnitude more electricity than gaming. And one is art and entertainment. I don’t even know how to respond here…
  - rs_rs_rs_rs_rs 4y ago
    >And one is art and entertainment This does not give you a pass for being wasteful.
    - nicbou 4y ago
      It's not wasteful. The energy is used for something, not deliberately wasted.
- beAbU 4y ago
  Video games are entertainment. Are you suggesting we shut down tv, radio, theatre, movies, theme parks, tourism because they are all wasteful and useless?
  - rs_rs_rs_rs_rs 4y ago
    Well if we're trying to save the environment and make a better life for future inhabitants of this planet why not shut down all of these? Why shut down just crypto currencies?
    - fragmede 4y ago
      Because video games scale with the number of human beings (with access to that technology). Even the most dedicated gamer can only play so much video game at a time. Cryptocurrency, however, scales to globally available power and cost. Because of the inherent competition between mining pools, the amount of electricity dedicated to mining just grows and grows.
- TheDong 4y ago
  Plenty of things with "no value" use electricity, but these other things don't use electricity in an adversarial way related to it's monetary cost. Let's take the example of video games: bitcoin uses about 150TWh of electricity. From EIA.gov's stats, it looks like residential computer usage is estimated at 36 TWh across the usa (2.4% of residential usage, 1.5T kWh residential [0]). Let's assume all residential computer usage is video games, so it's using a nice 1/4th bitcoin. So, what's different about these uses? Well, let's say that we manage to make electricity 5 times cheaper by, say, building a fusion reactor or a ton of solar panels. In that scenario, those computers playing video games still use the same amount of electricity, and their power bill goes down. Not a problem for computers/games. However, if the price of electricity goes down, that's actually a problem for bitcoin. Bitcoin is using 150TWh of electricity, which sorta means to perform a 51% attack, you need 75TWh of electricity (I know, it's more complicated than that). Now that electricity is 5 times cheaper, cool, someone can attack bitcoin for 5 times cheaper right? Well, we can't have that, so bitcoin now has to use 750TWh to have the same security it had before. The same thing happens for improvements to ASICs or any other improvements pretty much. If bitcoin is cheaper to mine, that just means more mining happens and the cost of mining stabilizes back out. On the other hand, if a game can be optimized to take less electricity, or use fewer servers, of course that'll happen. Like in almost any venture, accomplishing the same work for cheaper is good when it comes to video games. That is the difference I see. Crypto isn't just wasteful, it's adversarial to the point where it resists improvement. If we reached some energy utopia where electricity could fulfill 100% of all non-crypto uses on the planet at no meaningful cost, bitcoin would have to use so much energy that electricity still couldn't be free, or else it could be attacked with the free electricity. I cannot think of any other use of electricity that has this adversarial property. [0]: https://www.eia.gov/energyexplained/electricity/use-of-electricity.php https://www.eia.gov/energyexplained/electricity/use-of-elect...
  - hapticmonkey 4y ago
    You need more than just access to electricity to mine. You need the hardware, somewhere to run and maintain it, as well as the whole supply chain leading back to chip fabrication. These are all limited. You'd need a multi hundred-billion dollar covert operation to do all of that and it would take years to build.
- baby 4y ago
  Because it's not a cryptocurrency issue, it's a bitcoin issue. Most cryptocurrencies are green.
  - chx 4y ago
    Please elaborate how "most" cryptocurrencies are green.
    - baby 4y ago
      They don’t use proof of work, they’re similar to distributed database protocols
- jayd16 4y ago
  Maybe you don't like games but in what sense are they "more wasteful"? By what measure? Crypto is considered wasteful because you can compare it to cheaper, more traditional means of exchange. Games are entertainment or art that you can't really quantify in the same way. People enjoy the games themselves, not for any utilitarian purpose.
- teapowered 4y ago
  crypto is the only game where the person who burns the most coal wins
- TomSwirly 4y ago
  Because computer games do not consume 1% of the world's electric power. Because computer games give entertainment to three billion people. Because no one pretends that their computer games are going to overthrow the world's economic systems, and then try to sell them to some greater fool for much more money.
- irusensei 4y ago
  Not yet. I expect gaming and high end personal computing to be targeted sooner or later by the ever moving goalpost of environmental activism. Maybe in a dark timeline triple A gaming might be only available from cloud desktops as a service from licensed ESG and DRM friendly cloud providers. Crunching numbers and cryptographic calculations being a ToS violation. So I’m not a big fan of having people often with obvious hysterical political bias dictating what I do with the equipment and energy I paid for. This goes the same for mining or gaming. The idea that rendering realistic grass is okay but not SHA256 hashes is preposterous and borderline medieval. I’d say if there is a concern about energy usage please price it accordingly.
- pnt12 4y ago
  One is not like the other. Art and entertainment are not useless to society, just because they don't have a utilitarian aspect. You can see that millions of people enjoy art/entertainment in some form and pay for it. There are also big scams like predatory IP enforcement and micro transactions, which we should fight against. Cryptocurrencies were a revolutionary idea which has mostly resulted in crap results. Scams and random ware are rampant. Transactions are slow and expensive, unless you centralize them and lose all advantages of a decentralized platform. The environment pays huge costs with PoW, and PoS is always mentioned but never implemented by any of the big players. Also contributed to a shortage of chips and GPUs which affected the rest of the world. So no, one is not like the other.
baby 4y ago
Can't wait for Bitcoin to move to PoS

dotcoma 4y ago

So, will all this wasted effort be redirected towards something useful at last?

wmf 4y ago
Nah, it'll be used for "Uber for X in the metaverse".
- kristopolous 4y ago
  Hopefully with interest rates rising less stupid money will be available and we can reorient efforts towards things of values and needs. You know if we collectively insist on it. We gotta all say no to bullshit somehow.
  - nightski 4y ago
    Yeah I said no to Google & Facebook a long time ago.
viraptor 4y ago
Don't expect it. There's always some get-rich-quick scheme, or another research-this-investment idea. Something always fills the void. Bitcoin is just one of the biggest we've seen since everyone and their dog were buying shares / penny stocks.
- thomasz 4y ago
  Most pyramid schemes do not require massive amounts of energy.
  - wiseowise 4y ago
    That's what gives this scam substance. Easy to dismiss with "iT iS bAcKed bY eLeCtRiCiTy sPeNt".
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anigbrowl 4y ago

01100011 4y ago

As a miner, do you get to chose which transactions you mine? i.e. as the mining pool dries up(why run a rig if you're losing money), can whales sponsor miners to give their transactions priority, giving them superior liquidity to smaller bagholders?

3np 4y ago
Yes.
pavitheran 4y ago
Yes anyone sending a transaction can choose to set a higher fee rate to get their transaction prioritized to be included in the chain. The miners will try to include transactions that will pay them the highest fees in the next block.
Volker_W 4y ago
> As a miner, do you get to chose which transactions you mine? Yes, the mining pool can chose.
hackernudes 4y ago
Miners do choose. Giving transactions priority is called the "transaction fee" (am I missing something here?). In addition to that, there are out-of-band services called "transaction accelerators" that work directly with miners, but that is really only useful to bump up the priority of an existing slow/stuck transaction.

ec109685 4y ago

This seems like a temporary problem given the difficulty adjusts? https://news.bitcoin.com/bitcoins-sinking-price-pushes-hashrate-below-200-exahash-mining-difficulty-expected-to-slide-2-8-lower/ https://news.bitcoin.com/bitcoins-sinking-price-pushes-hashr...

mlyle 4y ago
It's a market. As bitcoin goes down, amount supplied of mining/hashing goes down. Difficulty adjusts downward which shifts the supply curve a little, but nowhere near enough to make it worth it to all the miners who mined before. A few percent change in difficulty doesn't make a 50% drop in bitcoin all better.
DeathArrow 4y ago
The used market is flooded with ASICS and GPUs so it seems the adjustment isn't working well. Also, many large miners didn't sell their coins and instead they borrowed real money to expand and fund their new mining operations. As the interest rates are climbing and crypto prices are going down, that's not possible any more.
- RL_Quine 4y ago
  Nobody has used a GPU to mine Bitcoin in a decade now.
  - sumy23 4y ago
    GPUs are used for eth. There is clearly a broad downturn in the mining sector.
    - RL_Quine 4y ago
      Ethereum is mostly mined using custom hardware, it's not graphics cards really, certainly nothing you could re-sell to anybody who expects to play Bioshock or whatever. Very small operations are people buying and using actual consumer GPUs, but they tend to be absolutely destroyed by the process and then sold to unwitting buyers. I've sorted through literal milk crates of GPUs before to find a single one which could reliably display a video output after they had been used in a mining operation.

baskethead 4y ago

I think it's only unprofitable in the US. Since China has banned mining, the US has become the country with the largest share of miners, and now as the price drops, mining will simply move to countries with lower costs of electricity.

agrover 4y ago
Why wasn't it there already?
- kayamon 4y ago
  Due to the ongoing events in the eastern Europe area, there's quite a lot of people who might have energy they'd like to sell/use for something, but can't necessarily sell it to whom they might like to. If there's a way they can sell it to the Bitcoiners, even at a price they might not like to, they might do that.
bushbaba 4y ago
Which would be? I’m not sure there’s much cheaper electric costs.
- fosk 4y ago
  Probably a country with cold weather (free air conditioning) and cheap access to natural oil and gas reserves.

thematrixturtle 4y ago

It's a self-correcting equilibrium though, since the block difficulty is tied to the hashrate, which will fall as miners pull out. That said, the hashrate is not showing major drops yet: https://www.blockchain.com/charts/hash-rate https://www.blockchain.com/charts/hash-rate

MengerSponge 4y ago
If they're either using subsidized or pirated electricity, and their hardware is paid for, why would miners pull out?
- DeathArrow 4y ago
  Basically you assume miners mine for free.
- RL_Quine 4y ago
  You don't have to do anything dodgy to get power at an unbelievably low cost, even in north america bulk rates are a couple of cents per kilowatt hour if you know where to look, and in some cases you can even be paid to use power due to politics. You can also be mining at a loss and have it be completely rational, because it is less of a loss than turning it off and writing off the equipment. The economics are very non intuitive for people who aren't exposed to the industry.
  - edmundsauto 4y ago
    What is the situation where people are being paid to sustainably consume power? Genuinely curious - seems like a ripe arb situation so I’m curious why it isn’t being taken advantage of.
    - pmorici 4y ago
      People using flair gas from oil wells for example to power a generator. The alternative is just burning the gas.

rubatuga 4y ago

This has happened so many times, that it's not really news.

arinlen 4y ago
> This has happened so many times, that it's not really news. Did it, though? Coindesk shows BTC right now trading at 18100$, way down from it's 2-month peak of 32k and year-peak of 66k. This means that in less than a year BTC tanked to 27% of its peak year value, and it's tanking even further. When was the last time you saw BTC lose 48k in value?
- rubatuga 4y ago
  When I saw bitcoin tank from 1000 to 500, it's all a matter of scale.
  - Izkata 4y ago
    I first got interested right around the Mt. Gox implosion, when it went something like 1200 -> 300.
- mattwilsonn888 4y ago
  > When was the last time you saw BTC lose 48k in value? Not using proportions is pure sensationalist nonsense. >50% drawdowns have happened several times in Bitcoin. So tell us again how this time is different.
  - croes 4y ago
    Using proportions is misleading. The reasons for drop from 1000 to 500 are different from those for a drop from 60,000 to 30,000.
  - onion2k 4y ago
    The absolute amount matters as well though. It's easy to imagine something that dropped from 1000 to 500 returning to 1000. That's a small rise in value, and if you believe the currency is really a currency you can imagine a "$1000 coin" being useful. Its harder to imagine a currency or a stock that fall $30000 returning to $60000. It might be the same percentage, but it's not the same in terms of psychology.

sloan 4y ago

Good. The world definitely does not need more wasteful bitcoin mining.

hossbeast 4y ago
Do you think the world could benefit from money that can't be manipulated by governments? If so, is it worth some expenditure of energy?
- EdwardDiego 4y ago
  It's being manipulated by private entities, so, I'm not really sure it's an improvement.
  - fsflover 4y ago
    Just like the government itself?
    - EdwardDiego 4y ago
      Governments are far more answerable to average citizens than the people behind Tether or the whales currently, even if government isn't ideally accountable. Also, governments have reasonable incentives to keep currencies at levels that maintain economic conditions. Being voted out or overthrown are consequences of economic mismanagement. I've yet to see that from Tether.
      - smokey_circles 4y ago
        > I've yet to see that from Tether The wheels of bureaucracy turn slowly, it's no different with any other financial scandal.
        EdwardDiego 4y ago
        True, but the fact that government regulation is needed kinda voids the argument that crypto currencies are great because they can't be manipulated by the government like a fiat currency.

addicted 4y ago

Here’s what I don’t understand. I’m genuinely looking for an explanation for this. Let’s assume everything works great for BTC. BTC is designed to eventually max out the number of coins. I believe the current expectation is that no more coins will be issued by 2040. What happens after that? If no more coins are issued, there’s no incentive to mine. And if there is no more mining then there will be no more transactions. Will the BTC blockchain just freeze at that point? If so why will it have any value any more? I’m not sure what the ideal expectations are beyond this scenario.

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bawolff 4y ago
There are still transaction fees to encourage mining. If you are interested in more detail, the original bitcoin paper goes in detail and is decently well written and much more straight forward to read then most people probably expect.
- thrtythreeforty 4y ago
  A lack of block rewards will incentivize all kinds of bad miner behavior: https://economics.princeton.edu/working-papers/on-the-instability-of-bitcoin-without-the-block-reward/ https://economics.princeton.edu/working-papers/on-the-instab... A nice quote: > ... we are able to prove that an equilibrium exists. However, it is one where miners include only a fraction of available transactions into their blocks. This results in a backlog of transactions whose size grows indefinitely with time.
  - bawolff 4y ago
    I agree that the game theory arguments about it all working out become much more hand wavey once rewards decline, but on the face of it, i don't neccesarily think not all transactions being processed is a problem (just retry with a higher transaction fee)

etaioinshrdlu 4y ago

It's not really serious unless transaction fees need to spike massively to compensate, otherwise like others noted, difficulty adjustments will handle to problem just fine.

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throwaway4good 4y ago

How is "average cost of mining" calculated / assessed? (Following the link just leads to some random tweet). It would be heavily dependent on the equipment used and the price of electricity which would vary a lot by location. And meaningfully it could be split in two: A fixed cost that is still there if the mining stops and a variable cost. And miners would be expected (short term at least) to continue mining until the price hit the variable cost which, in cases where excess free energy is used, is probably very low.

latchkey 4y ago
Pretty simple really. Capex and Opex. How much does it cost to set things up and how much does it cost to run things. In large scale deployments, like what I run, we colocate in existing datacenter space and they just charge us a flat power fee, which includes everything on their end. At scale, the costs to mine are FAR lower than the existing drops in the market. Articles like this are quite wrong... it is only unprofitable for smaller miners.
- throwaway4good 4y ago
  Yes. Where do they get this number from? How is it calculated?
  - latchkey 4y ago
    What number?
    - throwaway4good 4y ago
      That the average mining cost is about 19k pr Bitcoin.
      - latchkey 4y ago
        On a large scale, it is more like 7-9k. https://twitter.com/OhGodAGirl/status/1538318604847882240 https://twitter.com/OhGodAGirl/status/1538318604847882240

arisAlexis 4y ago

It was profitable at $1 and it will remain profitable because of the difficulty adjustment. This is tge second uninformed post in 2 days, the other didnt get many upvotes. Who is writing all these fake news? Edit: read up on pow before downvoting facts.

extant_lifeform 4y ago

GPUs shall be available again, REJOICE!!!

oaththrowaway 4y ago
Bitcoin is mined with ASICs, not GPUs
- Elinvynia 4y ago
  Still, the price of Bitcoin can have (and has had!) serious effects on the entire crypto ecosystem.

la_fayette 4y ago

Many people consider bitcoin as an investment, so it would not surprise me, that miners will do work if cost is higher than current bitcoin price.

yieldcrv 4y ago

As several people already wrote, difficulty adjusts. Are people playing devil’s advocate just for the sake of a rebuttal, or do you all really believe this “time is different”. Its not different enough to me. The macro environment’s influence isn't different enough to observe that the network still functions at a lower hashrate and a lower price. The best conversation is regarding the difficulty algorithm as bitcoin’s is the oldest one and no other community has used it since 2011.

labrador 4y ago

I'm trying to imagine how many days I would lose money mining in hopes of helping establish equilibrium. I can't imagine miners are very altruistic. I can also imagine many of them deciding the party is over and selling their valuable hardware. I don't have a clue what happens when nobody wants to mine it.

rag-hav 4y ago
The hardware would sell for a loss. But if they eat losses for 2 weeks, they could continue to extract profit from their hardware.

Aeolun 4y ago

Yes! Maybe I’ll finally be able to buy a new graphics card without spending an arm and a leg then…

irusensei 4y ago

Didn’t bitcoin survived the chinese crackdown on mining that yanked ~25%-ish of its hashrate overnight?

capableweb 4y ago
Biggest drop in hash-rate was in May/June 2021 when it dropped ~60% or something like that (https://www.blockchain.com/charts/hash-rate https://www.blockchain.com/charts/hash-rate), but yes, it did survive that (as the network is still running, online and working as it should). The all-time high of hash-rate for Bitcoin was in May this year.

usr1106 4y ago

Assume for a moment that the graph in the article is trustworthy. Then mining has been highly profitable for quite a while now and is now getting unprofitable. It has been unprofitable before. That's the same as in every busines: There can be periods of unprofitability. That does not mean that such business will die out completely. Especially after a phase of high profits there are buffers and there will be hope that profits will return. The question is how that graph is created. The mining costs are not the same for everybody. Probably some electricity used for mining is not paid for at market prices. (Including some might not be paid for at all) And even if it were, market prices (after subsidies and taxes) vary proably quite a bit over places where mining is happening.

dzdt 4y ago

There is a serious problem that is not much discussed. Bitcoin is susceptible to a 51% hash rate double-spend attack. As Bitcoin has grown, this has never been a practical issue. No miner or consortium has had that much hash-rate compared to the rest of the market. But when the hashrate drops below 50% of its previous maximum, that means that there are idle mining resources enough to carry out the attack. And owners of those resources may not mind throwing the whole Bitcoin system into chaos if they can get one last big payday. The lower the active hashrate grows, the smaller the consortium required to make an attack. So watch for chain forks and double-spend attacks. Maybe not this month or this year, but my expectation is it will be part of the eventual Bitcoin downward spiral.

QuantumGood 4y ago
In some sense bottom buyers wait for the worst news possible, and then calculate if the financial object can go to zero. This sounds like it might be the kind of news those kind of buyers would be waiting for.

Blackstone4 4y ago

Risk of a negative spiral if this continues and energy prices remain high…

sbarbarian 4y ago

hot take: it seems everything about crypto is full of problems invented for their own sake.

slantaclaus 4y ago

Unless you generate your own power, I assume