There are a several steps between bitcoin mining is wildly profitable and bitcoin mining is unprofitable that will slow down the difficulty growth rate.
First you will reach a point where buying hardware for mining is unprofitable. Next people with mining hardware with a high resale value will find it more profitable to sell the hardware than mine. Next some people will find that the cost of electricity is too high for any profit. The last step you would have to see before all miners shut down would be profits (ignoring electricity/hardware costs) going so low that its not worth the time and effort to keep them running.
Anyone of those events could slow down the difficulty growth and some could lower the difficulty.
Topic: Difficultly Level Increasing (Read 1841 times)
creighto, thanks.. I was just interpreting "mining is becoming unprofitable" to mean some miners will stop processing blocks. If it's completely unprofitable for all miners at 50btc per block AND all miners only mine for profit, then no blocks will be processed. Perhaps it's true that the entire bitcoin economy can subsist on the whim of miners who do so for fun, or whose computer has been broken into and bitcoin installed. However, probably not good to count on a steady supply of such enthusiasts and victims, and that's what transaction fees are for.
EDIT: I had included the arrogant bastard screen saver compute 4 cash above but it's actually irrelevant to my point, since if mining became less profitable their payouts would decline
EDIT: I had included the arrogant bastard screen saver compute 4 cash above but it's actually irrelevant to my point, since if mining became less profitable their payouts would decline
Turns out it was above 50%. Looks like mining will no longer be profitable in 3 weeks in anyway, unless the BC value goes up again dramatically.
If mining stops being profitable, people will need to start sending more transaction fees until it is profitable again, right?
No. Transaction fees are independent from the block mining reward. Transactions fees are currently quite rare, as there is plenty of space in an average block that there is no need to pay a transaction fee in order to prioritize your transactions.
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I see no difference between mining and processing bitcoin transactions...except it's shorter to say mining.
There isn't a difference, but the 50 bitcoin reward that a miner gets for solving the hash and processing the transactions is how Bitcoin issues new currency into the network. Any transaction fees that may be found would add to that reward.
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to be very clear..difficulty up, miners will start shutting down, blocks/hour will go down and people will have to wait longer for payments to go through. Then as individuals decide it's taking too long, they will start to voluntarily pay transaction fees until the payment goes through fast enough. As transaction fee revenue increases, mining will pick up again. This was all very clearly planned for from the start...
You're pretty close, but if miners drop out, and the average duration between blocks increases, paying a transaction fee would only speed up a transaction confirmation if there are enough transactions coming in during that time period to force that issue. Currently, we are way under the blocksize limit, and have plenty of space in the 'free' section.
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ALSO, can difficulty ever go down?
Yes, it can. It's a limted, but self adjusting algorithem, kinda like 'fuzzy logic', that tries to adapt the difficulty of the hash problem to the availability of hashing power so that the entire network averages 6 blocks per hour.
ALSO, can difficulty ever go down?
Yes, it adapts itself by looking at the past hash speed (or block generation speed) to stay in a average speed of 10mn per block (if i remember correctly all i've red there). Turns out it was above 50%. Looks like mining will no longer be profitable in 3 weeks in anyway, unless the BC value goes up again dramatically.
If mining stops being profitable, people will need to start sending more transaction fees until it is profitable again, right?
I see no difference between mining and processing bitcoin transactions...except it's shorter to say mining.
to be very clear..difficulty up, miners will start shutting down, blocks/hour will go down and people will have to wait longer for payments to go through. Then as individuals decide it's taking too long, they will start to voluntarily pay transaction fees until the payment goes through fast enough. As transaction fee revenue increases, mining will pick up again. This was all very clearly planned for from the start...
ALSO, can difficulty ever go down?
Turns out it was above 50%. Looks like mining will no longer be profitable in 3 weeks in anyway, unless the BC value goes up again dramatically.
PLEASE ANSWER THE POLL ABOVE
How strong will the Difficultly Level Increase be over next 30 days?
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