Topic: How fast the system will accomodate if the price makes mining uneconomical? (Read 3597 times)

simple just shut off your mining rigs and use the money you were going to use on electricty and maintaining those rigs to buy bitcoins instead because it'll be cheaper to buy them than make them. This will then make mining profitable again.

I'd start mining just for fun even if it was not worth it.

I think it will be after BTC post-collapse first electricity bill

too short delays and your risk large difficulty swings based on variance alone, even without hashrate changes

A big problem with bitcoin is people that dismiss this as a problem with bitcoin. My miners are now idle, i will use the money i was going to spend on electricity and buy btc.  One day BTC devs will realize this IS a problem and adjust the difficulty algo, i hope it is soon, 3 blocks and hour or so, is already not fun.

In a worst case scenario, the formula used to adjust difficulty can also be adjusted. It is not written in stone the way other parts ofd the bitcoin protocol are.

Namecoin scenario is not a good example as adopters were savvy bitcoin miners with the ability to redirect their rigs quickly.

Not everyone check the value of BTC on a daily basis nor have the same cost to produce. Take FPGA/ASIC for example, all they want is cheap BTC so most stop mining with their obsolete GPU.  They may be funding their new hardware expenses by selling all they can (at GPU price).

Reasonable ? Balls of steel if you ask me.

Now, real food for though, How long will it take for the ecosystem to stabilize on the move to 25btc/blk. ?
(don't answer here pls.)

It is simple math, difficulty adjusts every 2016 blocks, and it adjusts by Expected_time_to_complete/Actual_Time_To_Complete * Difficulty, with a max of 4x up/down.

The "time to adjust" depends on when the drop off occurred, how big a drop off, etc.

For example, say for block 1-1008 hashing went along at 1 block/10min. Then at block 1008-2016, half the hashrate disappeared, giving 1block/20min. It would take 3 weeks to complete 2016 blocks. 2weeks/3weeks = 2/3rds of difficulty, even though hashrate dropped by half, meaning another 2.25 or so weeks before a drop to proper difficulty (but at 1block/15min). Had half dropped at block 1, it would have been 1/2difficulty after 4 weeks of 1block/20min.

And so on.

Well - my question was how quickly this would happen, because if you think that this would happen immediately - then you are mistaken.

If the global hashrate were to suddenly drop, there'd a a huge uptick in the value of a single miner - e.g. my 400MH/s would suddenly be able to generate blocks quite quickly and I'd earn several hundred BTC in a fraction of the time it takes now.  Good for me, bad for the network, but I'd be happy with it for awhile. 

At which point, people would see the value in it again, and the global hashrate would increase.

I tend to think the only way the system would collapse completely is the way ANY financial system collapses completely: A complete and total loss of confidence.  Where in the real world with Fiat currency that means economic and social collapse, here it simply means miners turning off their programs and stop visiting the forum.

Many online ventures have died such an inauspicious death.

So long as some of us believe Bitcoin and crypto-currencies like it have a future, and we keep working toward it, I don't see that happening.

Me, I'm trying to get as much USD into the exchangers as I can to snap up the now-ultra-cheap BTC flooding the market.  If my bets are right, the BTC I'm buying today for $6.50 will be worth 3x as much come the end of next year, maybe more.  And I'll actually be able to pay our hosting costs (which are not small) using the BTC we earn, instead of having to put it on a bloody credit card.

I kick myself for not acting on Bitcoin when I started hearing about it back in January.  I could have thousands of bitcoins now, generated from my own mining.

One can dream.

Yeah but people running rigs of gpus will go under.... and they are a significant part of the hashrate.
Not that this is a problem for me 

I've said it on these forums many times, but it begs repeating as long as these threads keep popping up.

People will continue to mine for Bitcoins even if they cross the point of being unprofitable. The reasoning behind this is that if you look at projects like SETI@home or Folding@home, that ask users to basically run the same (if not more) computationally expensive tasks on their CPU/GPU in the game on non-profit research.

These people are indirectly giving these projects a $20-$30 per month donation in electricity costs with getting nothing in return.

Now take Bitcoin. You'll be getting SOMETHING in return that you think MIGHT be worth something again one day.

You might see a drop off of large scale miners, or people who feel they've made their money... but I doubt we'll see a dramatic drop in hashrate.

There is a lot of computing power being devoted to generating bitcoins, this wont fall away quickly - many people are parasiting electricity usage. I myself do a little bit of mining, only 15 mhash out of interest. I pay the electricity bill, but at a flat rate in our offices...

... what might take this away is if a new more profitable source becomes available. I am surprised drug companies haven't begun tapping the computing power of many spare PC's But at some point, somebody might need spare computing power a great deal and be willing to pay for it. That might make people switch from bitcoin mining to something else.

Mining companies don't loose. The person buying the contract buys the company its hardware and probably pays for the electricity, at the end of the contract, The company has a bunch of hardware which can
A; be re rented at the same/ simmilar rate or sold. Either way, its profit

The more I read between the lines in this forums the more likely I think exactly this is going to happen...

People are nuts.
"Mining companies" popping up, selling hashrate for payment in advance, and if you think of it the only way this could even remotely profitable (for these "companies") is if price & difficulty were to drop slowly but steadily.
The worst part is people actually use these services... its a gamble I know either you win or they win but, I think in the long run both loose.

Once again, UNLESS it's like namecoin.  The only scenario I could see causing this would be a competing GPU compute application paying out vastly more than bitcoin.  And even then you'd probably see a slow leak even for a 3x payout.  It would take days to weeks for most people to switch, giving the network time to adjust difficulty down (although there is a cap of 4x drop or rise every 2016 blocks). 

Once again, I base this on namecoin.  Even when looking at a 2-3x the payout for mining namecoin only about 10-15% of the bitcoin mining power switches for the few days it is profitable, and a pretty good chunk of namecoin miners stick around for the other few months where they're giving up 40% of their processing power.

Nothing much happens at all. You wait a few days for the difficulty to come down and transactions speed up again.

If the average block time is 12 minutes, then it will take about 12 * 2016 minutes = 16.8 days = 2.4 weeks to make the next adjustment.

I wouldn't worry much unless something like 75% of the network power (or more) evaporates very quickly.

No, it's not "only sometimes", it's on average. Don't feel like searching for the thread, but someone already made the analisys and for the last 2 days or so the average is 12ish minutes.

EDIT: Found the thread https://bitcointalksearch.org/topic/mining-as-a-whole-was-severely-reduced-in-the-last-2-weeks-36585
Just in case you thought i was talking nonsense...

Only sometimes, and then this is a decent approach down. Let it take 2 minutes for another 2-3 rounds - a slow slide down.

Look at how long namecoin take now to see a desaster for the chain.