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And this is why mining makes zero sense for any individual, at least as a profit making endeavor. When confronted with this scale of computational power, it wil

by mbreese 13y ago

And this is why mining makes zero sense for any individual, at least as a profit making endeavor. When confronted with this scale of computational power, it will be impossible for "the little guy" to make any profit mining. As a side effect, it will effectively centralize control of the currency to a few major computational groups that have the resources to make such big investments. If they ever wanted to cooperate, just a few of these groups could be able to determine policy for bitcoin as a whole.

applecore 13y ago
Mining pools were asked to switch to an earlier version of the Bitcoin software in March 2013 to roll back a blockchain fork[1]. [1]: http://bitcoin.org/en/alert/2013-03-11-chain-fork http://bitcoin.org/en/alert/2013-03-11-chain-fork
unavoidable 13y ago
I am curious - how do you think that these large groups will be able to set bitcoin policy? Technologically, they don't have much influence over the algorithms or the distribution of bitcoins as a whole. What meaningful policy decisions can be made?
- wmf 13y ago
  In Bitcoin a block can be up to 1 MB, yet mining pools are only generating 150-250 KB blocks and leaving many transactions unconfirmed.
- betterunix 13y ago
  They could selectively deny transactions. They might, for example, demand that you tie a real-world identity to your Bitcoin address before you can engage in any transactions, then deny transactions to people they dislike.
mrb 13y ago
This is false. "Little guys", think the guy mining with 1 or 2 USB thumbdrive-sized miners, make more relative profit than large scale miners. Whether you spend $50 to mine at 3 gigahash/sec, or $50,000 to mine at 3,000 gigahash/sec, in theory the relative profit is the same, but the extra costs associated to the 1000x scale become non-negligible. For the little guy, space, power, and cooling are effectively free. He makes use of space that was already available and unused (eg. his desk), cooling is easy (a few watts can be passively cooled), and power is so small (2.5W per port) that he effectively writes it off as insignificant. But a large scale miner like friedcat has to build or rent a data center facility, has to pay for air conditioning units, has a electricity bill he cannot ignore as insignificant, has to pay people to deploy and maintain the dozen of racks, etc. Source: I have been mining since 2010, at some point I was mining with 20 killowatt of GPUs (ten racks or so).
- zhaodaxiong 13y ago
  This seems incredibly similar to the claim that: all can make money, as long as you work hard! Is that really true? Think again...
- jorgem 13y ago
  Hmmm. Regarding the "relative profit" of small scale mining: There must be some gain in efficiency to moving to these largescale mining systems. Or everyone would just make lots of the small scale systems, right?
  - mrb 13y ago
    I think you misunderstand me. By "large scale" I mean people having 10,000 watt or more of mining hardware. It doesn't matter for my argument how these 10,000 watts are deployed (5,000 USB thumbdrive-sized miners, or 500 large water-cooled PCBs). Obviously, someone with 10,000 watts of USB thumbdrive-sized miners would run into the same costs eating his profitability: 10,000 watt of electricity bill, 10,000 watt that need to be cooled, etc.
    - jorgem 13y ago
      I think I get your point now: As an example, if I could somehow distribute a million USB sticks to a million different people and get them to mine for me (using their electricity and PC at no cost), I could more efficiently mine bitcoins because my lower costs would exceed the gains in processing efficiency that the largescale miners achieve?
      - mrb 13y ago
        Exactly!
        mbreese 13y ago
        But that's actually less efficient! You are making negligible amounts for each small USB miner, and whoever you are giving them to is probably spending more in the electricity than you are making! It would be just as profitable to ask those million people to just give you a penny every day or two. At least with larger setups, you get to pool your costs, and your power usage would be more efficient. Now, the counter to this are the micro-mining setups where you are using very little electricity, such as using a flashed router or Raspberry Pi to host your USB miners. In this case, you could even probably run it off of solar in most places to make running costs actually zero. You'd have maybe $100 more in initial costs (for solar), but you'd have no ongoing costs, only profit. BTW, your username is funny to me - those are my initials. It's like I'm having an argument with myself. It's been known to happen.
ihsw 13y ago
Absolute rubbish -- the only thing centrally controlled will be the generation of new BTC. That eventuality is expected and after all coins are mined then the reward will be transaction fees. Up until then, you are correct -- the rate of new BTC generated will be dominated by the few.
- mbreese 13y ago
  But in theory a majority cartel could control which transactions get added to the block chain. You'd be forced to follow their chain. And if you wanted your transaction processed, you'd have to follow their rules. I'm not saying this will happen, but it's possible.
redblacktree 13y ago
I mined 14 coins last year with a GPU I had anyway. My only regret is selling them immediately. At this moment, they'd be worth $11,704

by mbreese 13y ago

applecore 13y ago

Mining pools were asked to switch to an earlier version of the Bitcoin software in March 2013 to roll back a blockchain fork[1]. [1]: http://bitcoin.org/en/alert/2013-03-11-chain-fork http://bitcoin.org/en/alert/2013-03-11-chain-fork

unavoidable 13y ago

I am curious - how do you think that these large groups will be able to set bitcoin policy? Technologically, they don't have much influence over the algorithms or the distribution of bitcoins as a whole. What meaningful policy decisions can be made?

wmf 13y ago
In Bitcoin a block can be up to 1 MB, yet mining pools are only generating 150-250 KB blocks and leaving many transactions unconfirmed.
betterunix 13y ago
They could selectively deny transactions. They might, for example, demand that you tie a real-world identity to your Bitcoin address before you can engage in any transactions, then deny transactions to people they dislike.

mrb 13y ago

This is false. "Little guys", think the guy mining with 1 or 2 USB thumbdrive-sized miners, make more relative profit than large scale miners. Whether you spend $50 to mine at 3 gigahash/sec, or $50,000 to mine at 3,000 gigahash/sec, in theory the relative profit is the same, but the extra costs associated to the 1000x scale become non-negligible. For the little guy, space, power, and cooling are effectively free. He makes use of space that was already available and unused (eg. his desk), cooling is easy (a few watts can be passively cooled), and power is so small (2.5W per port) that he effectively writes it off as insignificant. But a large scale miner like friedcat has to build or rent a data center facility, has to pay for air conditioning units, has a electricity bill he cannot ignore as insignificant, has to pay people to deploy and maintain the dozen of racks, etc. Source: I have been mining since 2010, at some point I was mining with 20 killowatt of GPUs (ten racks or so).

zhaodaxiong 13y ago
This seems incredibly similar to the claim that: all can make money, as long as you work hard! Is that really true? Think again...
jorgem 13y ago
Hmmm. Regarding the "relative profit" of small scale mining: There must be some gain in efficiency to moving to these largescale mining systems. Or everyone would just make lots of the small scale systems, right?
- mrb 13y ago
  I think you misunderstand me. By "large scale" I mean people having 10,000 watt or more of mining hardware. It doesn't matter for my argument how these 10,000 watts are deployed (5,000 USB thumbdrive-sized miners, or 500 large water-cooled PCBs). Obviously, someone with 10,000 watts of USB thumbdrive-sized miners would run into the same costs eating his profitability: 10,000 watt of electricity bill, 10,000 watt that need to be cooled, etc.
  - jorgem 13y ago
    I think I get your point now: As an example, if I could somehow distribute a million USB sticks to a million different people and get them to mine for me (using their electricity and PC at no cost), I could more efficiently mine bitcoins because my lower costs would exceed the gains in processing efficiency that the largescale miners achieve?
    - mrb 13y ago
      Exactly!
      - mbreese 13y ago
        But that's actually less efficient! You are making negligible amounts for each small USB miner, and whoever you are giving them to is probably spending more in the electricity than you are making! It would be just as profitable to ask those million people to just give you a penny every day or two. At least with larger setups, you get to pool your costs, and your power usage would be more efficient. Now, the counter to this are the micro-mining setups where you are using very little electricity, such as using a flashed router or Raspberry Pi to host your USB miners. In this case, you could even probably run it off of solar in most places to make running costs actually zero. You'd have maybe $100 more in initial costs (for solar), but you'd have no ongoing costs, only profit. BTW, your username is funny to me - those are my initials. It's like I'm having an argument with myself. It's been known to happen.

ihsw 13y ago

Absolute rubbish -- the only thing centrally controlled will be the generation of new BTC. That eventuality is expected and after all coins are mined then the reward will be transaction fees. Up until then, you are correct -- the rate of new BTC generated will be dominated by the few.

mbreese 13y ago
But in theory a majority cartel could control which transactions get added to the block chain. You'd be forced to follow their chain. And if you wanted your transaction processed, you'd have to follow their rules. I'm not saying this will happen, but it's possible.

redblacktree 13y ago

I mined 14 coins last year with a GPU I had anyway. My only regret is selling them immediately. At this moment, they'd be worth $11,704