Does the number of miners reduce when the price drops? - page 2.

hosseinimr93

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Quote from: dzungmobile on August 04, 2024, 07:48:43 AM

Block times can be longer than 10 minutes or shorter than 10 minutes, depends on network hash rate and blockchain difficulty.

This is not accurate and it may be a little confusing for a newbie that is not much familiar with how blocks are mined.

The block time can always be more or less than 10 minutes, regardless of whether the network hash rate has increased or decreased.
If the total network hash rate increases, the average block time would be less than 10 minutes until the difficulty is adjusted, but we can still have many blocks mined in less than 10 minutes and even in few seconds.

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Quote from: deepskydiver on August 04, 2024, 05:40:55 AM

Just wondering if anyone has noticed a trend of longer block times when the price drops. I presume some proportion of miners become unprofitable. And that of those - some might need to convert to fiat in the short term to cover costs and so pause mining.

Miners will continue their operations as long as they can still make a profit. But if the situation worsens, any person who is in business would give, knowing they were losing.

Upon seeing the current situation, I don't think it was enough for them to stop. These miners have been in business for many years and have already adjusted to the volatile situation of the market. It is already in their minds that not always the price is high; sometimes it drops, which causes some profit decline. And I already know what the best thing to do is—not to give up.

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Quote from: crwth on August 04, 2024, 05:57:10 AM

I see this as a problem within users only, but it's a different story for miners. They have invested a lot of money in buying a lot of mining rigs to mine, and I don't think they would stop just because the price drops. With that in mind, the miners have gone through so many cycles within the market and are not bothered with the natural cycle.

But not all miners will be profitable or all will survive, miners will also compete and be eliminated like investors. Bitcoin mining is a business, so it will also be affected by many different factors, and some people will profit but others will also lose. So I think bitcoin price decline and prolongation is sometimes one of the reasons why some miners give up.

Perhaps for organizations and mining companies, the decrease in bitcoin price is probably not a big problem for them because they have abundant budgets and capital resources as well as better plans. But for small organizations or individual mining farms, they will face more difficulties if the price of BTC falls seriously over the long term.

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Quote from: deepskydiver on August 04, 2024, 05:40:55 AM

Just wondering if anyone has noticed a trend of longer block times when the price drops. I presume some proportion of miners become unprofitable. And that of those - some might need to convert to fiat in the short term to cover costs and so pause mining.

Block times can be longer than 10 minutes or shorter than 10 minutes, depends on network hash rate and blockchain difficulty. With same blockchain difficulty, if network hash rate drops, block times will increase and if with same blockchain difficulty, you have bigger network hashrate, block times will become shorter.

Price drops can or can not be enough to force Bitcoin miners to leave Mining industry. There tough time when market crashes and stays in low price range for a long time, that cause significant temporary losses on weak bitcoin miners. They will have to leave, turn off their ASICs or even sale off their ASICs too.

You can see times when Bitcoin miner capitulation happens in the past.
https://www.bitcoinmagazinepro.com/charts/hash-ribbons/

hosseinimr93

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Quote from: pakhitheboss on August 04, 2024, 07:36:13 AM

Bitcoin mining is no longer a business that a sole miner can pursue and with the last halving, it is becoming difficult for small miners too. Only big companies are into Bitcoin mining which is a shame as it was never meant to be controlled by those who have money or you can say the corporates.

Now, it's almost impossible to mine bitcoin solo, but it's not that small miners are out of the business. Small miners can join mining pools.

Quote from: pakhitheboss on August 04, 2024, 07:36:13 AM

While 10 minutes it should take for the miners to mine a new block sometimes it goes beyond that time which I agree but that does not affect the price of Bitcoin. If you want to know the reason why there is a delay in mining the blocks currently then you should go ahead and read this, Bitcoin: Network Difficulty Reaches an Unprecedented level.

The article you shared doesn't say anything about why blocks can take more than 10 minutes to be mined.

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Quote from: deepskydiver on August 04, 2024, 05:40:55 AM

Just wondering if anyone has noticed a trend of longer block times when the price drops. I presume some proportion of miners become unprofitable. And that of those - some might need to convert to fiat in the short term to cover costs and so pause mining.

Bitcoin mining is no longer a business that a sole miner can pursue and with the last halving, it is becoming difficult for small miners too. Only big companies are into Bitcoin mining which is a shame as it was never meant to be controlled by those who have money or you can say the corporates. While 10 minutes it should take for the miners to mine a new block sometimes it goes beyond that time which I agree but that does not affect the price of Bitcoin. If you want to know the reason why there is a delay in mining the blocks currently then you should go ahead and read this, Bitcoin: Network Difficulty Reaches an Unprecedented level.

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Quote from: deepskydiver on August 04, 2024, 05:40:55 AM

Just wondering if anyone has noticed a trend of longer block times when the price drops. -snip-

Can you provide data or research that can back up this claim?
Anyways, that sounds plausible and even charts suggests that there may be truth behind your guess.

Let's use charts;
Based from bitinfocharts's charts, the peaks and bottoms of the average block time (since you've used this as basis in your post) doesn't look tied to the average price:

The above doesn't tell anything since you shouldn't be using the block time because it's affected by luck and "retarget" that changes the difficulty in every 2016 blocks.
You should compare it with the networks "total hashrate" that roughly tells how many miners are active instead:

Based from the charts above, both peak roughly at the same points, bottoms, not that much.
If you want to conduct more research, you should use more data than those charts, but it's a start.

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I see this as a problem within users only, but it's a different story for miners. They have invested a lot of money in buying a lot of mining rigs to mine, and I don't think they would stop just because the price drops. With that in mind, the miners have gone through so many cycles within the market and are not bothered with the natural cycle.

hosseinimr93

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Quote from: Mia Chloe on August 04, 2024, 05:43:43 AM

No miners don't drop when price drops. What happens is that miners try to wait a little longer before confirming them hoping that others trying to initiate a transaction will tend to increase their fees so that their transactions will be confirmed faster instead of waiting in the MEMPOOL.

No.
Miners are always competing with each other. So, they don't wait and they always try to mine more blocks. If mining is not profitable for miners, they would stop mining, not that they would wait some time just to increase the fee.

Bitcoin price has decreased by more than 10% in the last week. Did the fees increase? No. Miners are now confirming transactions paying around 3 sat/vbyte as fee.

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When the price drop after halving, it is possible that some miners may not let their mining machine to be working because the price of bitcoin halve which is it divided into 2 as the mining reward, also the price of bitcoin that decrease. This will discourage many miners to continue mining. But if that the price of bitcoin is increasing, this will encourage miners. Despite this is what that can happens in life, there are some exceptional time like 2022 when bitcoin price significantly reduced continuously but bitcoin mining hash rate increased continuously at the time.

deepskydiver

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So fees increase to preserve rough profitability?

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No miners don't drop when price drops. What happens is that miners try to wait a little longer before confirming transactions with the simple logic that others trying to initiate or broadcast a transaction will tend to increase their fees so that their transactions will be confirmed faster instead of waiting in the MEMPOOL , in addition to them competing for transactions with higher fees . this is the reason why nodes have a minimal purge fee. Mining requires a lot of hash rate especially if you are going to be confirming transactions. The hash power in turn also invites high electricity costs and for miners to be in profit, they would prefer higher fees.

Infact it's important to know that the hash power required to confirm transactions is quite high therefore solo miners rarely confirm transactions rather they depend on Proof of work rewards for finding valid hashes.

If miners increase and decrease when fee drops then during halving when fees were high there would have been a drastic increase in number of miners.

deepskydiver

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Just wondering if anyone has noticed a trend of longer block times when the price drops. I presume some proportion of miners become unprofitable. And that of those - some might need to convert to fiat in the short term to cover costs and so pause mining.

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