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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 use

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
- croes 4y ago
  >it is only unprofitable for smaller miners. So this will lead to less smaller miners and more concentration of power for the big ones
  - latchkey 4y ago
    Yes, but it doesn't really matter as long as there are mining pools. Even big miners still have to pool mine because the overall hashrate is so great that even a multi megawatt miner still doesn't have enough hashrate to solo mine. Plus, solo mining is just more financially risky. Unless you have a couple percentage points of the total hashrate, it just doesn't make financial sense. Even then, large miners will negotiate deals with the pools for a lower % take of the fees. Those fees effectively pay the pool for their own costs so that the miner doesn't have to worry about the rest. So, the only real centralization is with the pools and as we've already seen in the past [1], as soon as a pool gets to 51%, miners switch to another pool (which is quite easy and not a lot of effort). [1] https://en.wikipedia.org/wiki/GHash.io https://en.wikipedia.org/wiki/GHash.io
    - croes 4y ago
      >as soon as a pool gets to 51%, miners switch to another pool That's not guaranteed. "Since no long-term solution to the 51% problem is known, the participants agreed to implement some temporary measures. GHash.io released a voluntary statement promising that it would not exceed 40% of the overall bitcoin hashrate"
      - latchkey 4y ago
        At the end of the day, everyone left and they went out of business.
- 88840-8855 4y ago
  capex is not the cost for setting things up. opex is not the cost for running things. you mix things up. you mean fix and var costs.
  - latchkey 4y ago
    This is what I'm referring to: https://www.investopedia.com/ask/answers/112814/whats-difference-between-capital-expenditures-capex-and-operational-expenditures-opex.asp https://www.investopedia.com/ask/answers/112814/whats-differ... Capital expenditures (CAPEX) are major purchases a company makes that are designed to be used over the long term. Operating expenses (OPEX) are the day-to-day expenses a company incurs to keep its business operational.

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
croes 4y ago
>it is only unprofitable for smaller miners. So this will lead to less smaller miners and more concentration of power for the big ones
- latchkey 4y ago
  Yes, but it doesn't really matter as long as there are mining pools. Even big miners still have to pool mine because the overall hashrate is so great that even a multi megawatt miner still doesn't have enough hashrate to solo mine. Plus, solo mining is just more financially risky. Unless you have a couple percentage points of the total hashrate, it just doesn't make financial sense. Even then, large miners will negotiate deals with the pools for a lower % take of the fees. Those fees effectively pay the pool for their own costs so that the miner doesn't have to worry about the rest. So, the only real centralization is with the pools and as we've already seen in the past [1], as soon as a pool gets to 51%, miners switch to another pool (which is quite easy and not a lot of effort). [1] https://en.wikipedia.org/wiki/GHash.io https://en.wikipedia.org/wiki/GHash.io
  - croes 4y ago
    >as soon as a pool gets to 51%, miners switch to another pool That's not guaranteed. "Since no long-term solution to the 51% problem is known, the participants agreed to implement some temporary measures. GHash.io released a voluntary statement promising that it would not exceed 40% of the overall bitcoin hashrate"
    - latchkey 4y ago
      At the end of the day, everyone left and they went out of business.
88840-8855 4y ago
capex is not the cost for setting things up. opex is not the cost for running things. you mix things up. you mean fix and var costs.
- latchkey 4y ago
  This is what I'm referring to: https://www.investopedia.com/ask/answers/112814/whats-difference-between-capital-expenditures-capex-and-operational-expenditures-opex.asp https://www.investopedia.com/ask/answers/112814/whats-differ... Capital expenditures (CAPEX) are major purchases a company makes that are designed to be used over the long term. Operating expenses (OPEX) are the day-to-day expenses a company incurs to keep its business operational.