5 ms·

> When miners can't cover costs, they sell bitcoin to fund operations Surely they should stop producing until its profitable again, or am I missing something?

ceejayoz 7mo ago
You're missing that humans are often irrational. They may be hoping it goes back up.
Snoozus 7mo ago
If everyone stopped mining transactions couldn't go through anymore and the value of bitcoin would drop. If you're heavily invested in bitcoin that's bad. Also miners try to squeeze in their preferred transactions which they can't do when they're not mining. Finally the costs dont drop to zero when you turn the miners off, so the loss from mining might be less than the loss when not mining.
- derangedHorse 7mo ago
  He's not saying everyone, just the ones who are unprofitable. Not everyone mines bitcoin at the same cost. The ones who do have to stop can also profit from curtailment depending on the price of energy relative to hash profit.
- illiac786 7mo ago
  Isn’t mining and transactions separate? Sure you need to have online participants, but they don’t have to actively mine, right?
  - OJFord 7mo ago
    No, mining is exactly what makes transactions go through, computing the next result in chain, certifying that the transaction happened.
  - arter45 7mo ago
    You can generate transactions but ultimately transactions are validated and written in the blockchain by miners. Mining is essentially a way to select voters based on their ability to solve puzzles, ensuring that if you are selected once you have no particular advantage next time. Without miners this whole system doesn’t work.
- singpolyma3 7mo ago
  What? That's not true. You don't need more than one CPU miner online for tx to go through. That's why there are difficulty adjustments.
  - nytesky 7mo ago
    But as number of miners drop arent btc at risk of a 50% attack?
    - groundzeros2015 7mo ago
      But if you have anywhere near the market power to do a 50% attack, you can make a lot of money mining.
delusional 7mo ago
If you bought a bunch of hardware to mine bitcoins, then not using that hardware represents a 100% loss of value. You may lose money producing, but you would lose even more money not producing.
acidphreak2k 7mo ago
When I was mining circa 2017 - 2021 (approx. 1 BTC/month and 25-30 ETH/month) and planning it all out, I prepared myself psychologically to operate for up to 2 years without any profits or selling. It was a hard pill to swallow and a huge risk; my costs were $8500/month in electrical and then another ~$2200 on a lease for the warehouse. When it dropped to $3,000/BTC a few months after I came online and stayed there for 6-8 months, I started wondering if I was the biggest dumbass in my county. Thankfully, it all worked out in the end very well. I don't know how anyone would put in the effort/money to get a major crypto farm going and plan to just cash out every month to pay bills. What's the point? I always thought of it as a long-term bet on the price going way up, which it did.
- VladVladikoff 7mo ago
  Seems like you could have made that same bet by just buying BTC with that money and doing twice as good.
  - embedding-shape 7mo ago
    I dunno, probably only if you don't count for human psychology. If they bought N BTC and tried to held them, would they still hold them when they double in value? What about increasing 10-fold? Compared to doing some work to getting 1 BTC per month, which you can then individually decide what to do with, instead of a lump sum you could cash out at any moment.
    - VladVladikoff 7mo ago
      This was my great failure with Bitcoin. Bought in at $100, had many coins at $400. Sold most of it by $3000. Hard to not cash out when your investment goes 30x. In hindsight… ugghhh.
  - OJFord 7mo ago
    I mined in 2014 with free electricity and that was true even then. That's with hindsight though, the mining reward is more predictable than that market price would increase (more than) equivalently.
csomar 7mo ago
It's a very low effort article. There are several places where the cost of electricity is roughly zero and state actors have interest in Bitcoin (Iran/Russia) or strong actors more powerful than the state (Libya/Venezuela). It's not surprising that this is good news for them as mining rigs for Bitcoin are much lighter to transport than the ones for oil.
pessimizer 7mo ago
You're not missing anything. As you can see if you read through the thread, they rely on bitcoin miners being heavily invested into bitcoin and bitcoin equipment, so those people will operate unprofitably to prop up their holdings. It's a moron's economy. A system that relies on externalities and corruption, and produces nothing of value. It's the art market with no art. If bitcoin miners are smart enough to have anticipated this, and decided not to hold onto bitcoin and just let it drop; and also to have repurposed their equipment, sold it to bigger fools, or have just run it into the ground, none of these ideas make any sense. Why would they, though? The real answer is that governments and monopolists are propping up bitcoin through simply handing tax money to bitcoin holders, and in the case of the latter (also government tit-suckers) leveraging themselves to pump up bitcoin markets when they are down. I'm sick of humoring this because it was once mildly interesting technically. It's a criminal scheme and everyone involved needs to go to prison. When I hear a politician say the word bitcoin, I'm going to do everything in my power to damage that politician.
- catlikesshrimp 7mo ago
  I need to buy a service. The service is provided in the US, where it is a grey area service. The service provider is not trustworthy enough to give it my credit card, and it doesn't accept neither paypal nor stripe. Unsurprisingly, it accepts bitcoins. The way bitcoin exists, the provider accepts bitcoin; it doesn't accept other crypto. I would rather bitcoin, or something equivalent to exist than not. There is also the case of people who hold value in bitcoin because it is more stable than their banks; go figure. This was the case in Argentina and Venezuela. That was also a gray area, but I think it would morally acceptable to do that even if it was prohibited
  - paulryanrogers 7mo ago
    What did folks in Argentina and Venezuela do before Bitcoin? Perhaps that's even better?
    - catlikesshrimp 7mo ago
      Decades ago, in my country it was illegal to hold dollar bills. Naturally, you couldn't have dollar bank accounts. What was done back then was to illegally keep bills inside bags, hidden, and pray god they weren't found because you would go to prison. The alternative is not holding money yourself. Buy everything as soon as you can, and hoard physical goods, which is cumbersome, dangerous and inefficient. Bitcoin is an upgrade in all senses.
tgsovlerkhgsel 7mo ago
If you've already bought a miner, you will mine until the price of electricity exceeds the revenue from mining. If what's left over after paying for the electricity isn't enough to pay for the cost of the miners (and other already-committed fixed costs), you might make a loss, but still be incentivized to continue to at least recoup some of the loss.

ceejayoz 7mo ago

You're missing that humans are often irrational. They may be hoping it goes back up.

Snoozus 7mo ago

If everyone stopped mining transactions couldn't go through anymore and the value of bitcoin would drop. If you're heavily invested in bitcoin that's bad. Also miners try to squeeze in their preferred transactions which they can't do when they're not mining. Finally the costs dont drop to zero when you turn the miners off, so the loss from mining might be less than the loss when not mining.

derangedHorse 7mo ago
He's not saying everyone, just the ones who are unprofitable. Not everyone mines bitcoin at the same cost. The ones who do have to stop can also profit from curtailment depending on the price of energy relative to hash profit.
illiac786 7mo ago
Isn’t mining and transactions separate? Sure you need to have online participants, but they don’t have to actively mine, right?
- OJFord 7mo ago
  No, mining is exactly what makes transactions go through, computing the next result in chain, certifying that the transaction happened.
- arter45 7mo ago
  You can generate transactions but ultimately transactions are validated and written in the blockchain by miners. Mining is essentially a way to select voters based on their ability to solve puzzles, ensuring that if you are selected once you have no particular advantage next time. Without miners this whole system doesn’t work.
singpolyma3 7mo ago
What? That's not true. You don't need more than one CPU miner online for tx to go through. That's why there are difficulty adjustments.
- nytesky 7mo ago
  But as number of miners drop arent btc at risk of a 50% attack?
  - groundzeros2015 7mo ago
    But if you have anywhere near the market power to do a 50% attack, you can make a lot of money mining.

delusional 7mo ago

If you bought a bunch of hardware to mine bitcoins, then not using that hardware represents a 100% loss of value. You may lose money producing, but you would lose even more money not producing.

acidphreak2k 7mo ago

When I was mining circa 2017 - 2021 (approx. 1 BTC/month and 25-30 ETH/month) and planning it all out, I prepared myself psychologically to operate for up to 2 years without any profits or selling. It was a hard pill to swallow and a huge risk; my costs were $8500/month in electrical and then another ~$2200 on a lease for the warehouse. When it dropped to $3,000/BTC a few months after I came online and stayed there for 6-8 months, I started wondering if I was the biggest dumbass in my county. Thankfully, it all worked out in the end very well. I don't know how anyone would put in the effort/money to get a major crypto farm going and plan to just cash out every month to pay bills. What's the point? I always thought of it as a long-term bet on the price going way up, which it did.

VladVladikoff 7mo ago
Seems like you could have made that same bet by just buying BTC with that money and doing twice as good.
- embedding-shape 7mo ago
  I dunno, probably only if you don't count for human psychology. If they bought N BTC and tried to held them, would they still hold them when they double in value? What about increasing 10-fold? Compared to doing some work to getting 1 BTC per month, which you can then individually decide what to do with, instead of a lump sum you could cash out at any moment.
  - VladVladikoff 7mo ago
    This was my great failure with Bitcoin. Bought in at $100, had many coins at $400. Sold most of it by $3000. Hard to not cash out when your investment goes 30x. In hindsight… ugghhh.
- OJFord 7mo ago
  I mined in 2014 with free electricity and that was true even then. That's with hindsight though, the mining reward is more predictable than that market price would increase (more than) equivalently.

csomar 7mo ago

It's a very low effort article. There are several places where the cost of electricity is roughly zero and state actors have interest in Bitcoin (Iran/Russia) or strong actors more powerful than the state (Libya/Venezuela). It's not surprising that this is good news for them as mining rigs for Bitcoin are much lighter to transport than the ones for oil.

pessimizer 7mo ago

You're not missing anything. As you can see if you read through the thread, they rely on bitcoin miners being heavily invested into bitcoin and bitcoin equipment, so those people will operate unprofitably to prop up their holdings. It's a moron's economy. A system that relies on externalities and corruption, and produces nothing of value. It's the art market with no art. If bitcoin miners are smart enough to have anticipated this, and decided not to hold onto bitcoin and just let it drop; and also to have repurposed their equipment, sold it to bigger fools, or have just run it into the ground, none of these ideas make any sense. Why would they, though? The real answer is that governments and monopolists are propping up bitcoin through simply handing tax money to bitcoin holders, and in the case of the latter (also government tit-suckers) leveraging themselves to pump up bitcoin markets when they are down. I'm sick of humoring this because it was once mildly interesting technically. It's a criminal scheme and everyone involved needs to go to prison. When I hear a politician say the word bitcoin, I'm going to do everything in my power to damage that politician.

catlikesshrimp 7mo ago
I need to buy a service. The service is provided in the US, where it is a grey area service. The service provider is not trustworthy enough to give it my credit card, and it doesn't accept neither paypal nor stripe. Unsurprisingly, it accepts bitcoins. The way bitcoin exists, the provider accepts bitcoin; it doesn't accept other crypto. I would rather bitcoin, or something equivalent to exist than not. There is also the case of people who hold value in bitcoin because it is more stable than their banks; go figure. This was the case in Argentina and Venezuela. That was also a gray area, but I think it would morally acceptable to do that even if it was prohibited
- paulryanrogers 7mo ago
  What did folks in Argentina and Venezuela do before Bitcoin? Perhaps that's even better?
  - catlikesshrimp 7mo ago
    Decades ago, in my country it was illegal to hold dollar bills. Naturally, you couldn't have dollar bank accounts. What was done back then was to illegally keep bills inside bags, hidden, and pray god they weren't found because you would go to prison. The alternative is not holding money yourself. Buy everything as soon as you can, and hoard physical goods, which is cumbersome, dangerous and inefficient. Bitcoin is an upgrade in all senses.

tgsovlerkhgsel 7mo ago

If you've already bought a miner, you will mine until the price of electricity exceeds the revenue from mining. If what's left over after paying for the electricity isn't enough to pay for the cost of the miners (and other already-committed fixed costs), you might make a loss, but still be incentivized to continue to at least recoup some of the loss.