Topic: [2017-11-12] Analyst: “In 4 years BTC mining won’t be profitable anymore” (Read 11215 times)

in 4 years, much can change, for example, the price of bitcoin, new machines for mining, perhaps very cheap electricity. It is very difficult to predict something

Where in this article or discussion is anything about bankruptcy.
They are simply stating that mining might become unprofitable. What they fail to understand is that not only difficulty adjusts but also the price. Years ago you were mining a bitcoin worth $7, now it's $7000. If we continue the exponential growth in those 4 years we might have a coin worth $50k. This will be more than enough to bring miners into the business.

If miners are doing enough effort to spam the network, they'll fetch like 3-4 BTC per block, in an ideal situation (ideal for the miners obviously). In some cases you see blocks include massive fee amounts, but that's more a mistake from a user/service playing around with manually created transactions. It from time to time happens that you'll see these large block fees pop up, but it's not a frequent occurrence. If the network isn't operating under a huge load of spam, blocks mostly contain like 0.5 to at most 1 BTC in transaction fees.

The bitcoin course will grow to this level or more sophisticated equipment will be created. Perhaps ASIC in 4 years will have much higher technical characteristics.

Mining was introduced with only one simple goal - to prevent double spending. In Bitcoin's network costs of double spending attack outweigh potential gains from this attack, making it unprofitable, thus discouraging people from doing it. In the future, when Bitcoin's value will be very high, it might be more attractive than today to try to make a double spending attack, so it's important that the network has to always be secured by enough hashpower. But again, there will be a new self-regulating mechanism for it - if Bitcoin's value will be high because of interest from users, the total amount of fees per block will also be high, so more hashpower will be working on securing the network. If the interest and price will be low, than double spending attack will also be less profitable, and less hashpower will be needed.

OK.. Let's look at the current situation now. The miners are getting as much as 10 BTC from just transaction fee, from each of the blocks which they mine.

The computation is based on current trends wherein most of the profit from mining are coming from the blocks that are being solved to mine new bitcoins, but once more and more people are using bitcoin then more transactions will be made and the transaction fee will compensate income from mining.

His analysis is incorrect. Mining profits are diluted as more miners enter the market. If miners are complaining about their lack of profits, it's because there are too many of them competing for the same block reward and transaction fee resources.

It's a tough world, mining booms and busts are nothing new. They will simply need to shutdown and take the loss so that mining becomes more concentrated and profitable to the remaining miners.

Well, increasing the size of blocks is the worst way to increase the rate of transactions. There are other much better ways to do it.

And, the blocksize was increased 2 months ago. The max blocksize was 1MB, it's now 4MB.

I do not believe that bitcoin will go bankrupt. But I am sure that bitcoin will require constant upgrading. Without it can not exist even the world's most trusted mechanism. I don't understand all the intricacies of bitcoin mining but I don't understand why it is impossible to increase the number of transactions. It was the decision to increase the size of the block. The more transactions the greater will be the remuneration of the miners.

That's what the whole Lightning Network concept has always been based on: users can hop channels.

So, if I've got a channel with you gentlemand, and you've got a channel with ChromticStar, I can send BTC to ChromaticStar via the channel I have with you. And so everyone can send to anyone, as long as there's a viable route across the network.

In 4 years BTC will be mined completly not just not profitable

He is missing two things- the price of Bitcoin will shoot up exponentially and transaction fees will increase. If mining is not profitable, then miners will shut down which implies that the Bitcoin network will shut down. That is not going to happen.

I've never understood this one.

For lightning channels to open and close they have to have on chain transactions. If we assume blocks remain small then on chain transactions will be hideously expensive. Miners will make more money than ever in fees.

Maybe there'll be a yet to be discovered way for channels to never have to go on chain again, but there'll always be on chain needs.

Only low enough to ensure that mining is profitable indefinitely, I'm not suggesting a specifically defined numerical hashrate, but a lot of these miners seem to be trying to make a quick buck. History is full of mineral commodity booms and busts, this is a digital mining boom that will bust. The argument that we need the current hashrate for security reasons is complete non-sense. BTC isn't going to be attacked even though we just lost 50% of the miners. No one has the hash power to attack it except the miners themselves, which would be suicide.

If this Chapman guy thinks BTC needs to be $300,000 in 2022 to make mining profitable, well he's wrong. If the price is only 10% of that, then 90% of the unprofitable miners will need to shutdown and the 10% that are left will be the profitable ones. I'm willing to bet BTC still won't be attackable at that hashrate.

Who knows what Bitmain will be shitting out and where Moore's Law will put us? For all we know, a profitable hash rate may be 100x higher that it is today.

Then again, maybe I'm being pessimistic about price and we may indeed be at $300,000 in a few years.


Just that we're in a mining bubble and the miners of today are likely to go bust in a few years as the block reward drops off and people switch to zero fee lightning.

So, why don't you tell us how low the hashrate should be to keep Bitcoin's blockchain sufficiently secure?

No-one can answer that question definitively, Satoshi's cryptocurrency concept isn't sufficiently mature to make such non-empirical judgements. If you've actually got a meaningful, empirical way of analysing the issue, please tell us. Until then, the hashrate will simply follow the price, and self-interest will drive miners to compete as efficiently as they can (and hashrate security will continue to be a by-product of that).


I mean, what's the actual idea being proposed by the "hashrate is too high" contingent? Anything?

This is alarming in the sense that when there will no longer be Bitcoin miners, Bitcoin will no longer experience growth as many are expecting. There will be poor circulation of Bitcoins thus there will be less people who will demand of it because they already know for a fact that there will no longer be any production. I think we have to do something to make the process less costly for miners. Otherwise, we will all suffer from this internal problem. 

If the problem is the profitability of bitcoin mining because of electricity cost related.. Is new technology on free electricity still not available on that country he is living with.. This observation is not only malice with personal intentions or making such statements is a mere speculation without any basis of reality.. They almost give so many reason for destroying bitcoin and killing it but nothing really works..

In four years a lot of things could change and new code could make mining still profitable. Nobody could say something so essential to Bitcoin will just stop working. But if you think well, in the beginning mining wasn't profitable.

I've wondered about this before. How much security do we really need? The hash rate is a measure of security, but it is so exorbitantly high that no single individual will come close to it attacking it.

If half the miners dropped out, like they just did to go mine BCH, would that be such a bad thing? Difficulty will readjust, BTC will still hum along. Eventually the only thing that will make BTC profitable will be if enough people adopt it and transaction fees pay the difference in electrical costs since block rewards will drop off.

Am I missing something? Of course we want security, but I really don't think we need this much. From my perspective, we are in the mining bubble stage. Unless hash rate drops so low that it could be attacked, there shouldn't be a real need to worry.