Topic: Hypothetical price collapse and massive farms failure. (Read 3268 times)

yeah. Emergency hardfork the shitcoin like all good shitcoins do.

@OP

The scenario you describe can happen. Technically this can be prevented by changing the block time retargeting so that it happen either every N blocks or after time T, at the next block (whatever come first).

Yeah, that's right... It could be easier to attack, less money is needed, yeah. But the beauty of it is that it effectively is a self-regulating system. As soon as the difficulty goes down, there's more incentive for people to turn on their (old) gear!

This is true, however, a low hashrate means easy to attack. At these prices the incentive to attack is much greater than single digits so the only way for a low hashrate to work safely is to have a low price to match it.

Doesn't matter, we don't need a high hash rate for Bitcoin to work correctly. A lot of people assume that Bitcoin needs a high hash rate in order to process a large number of transactions. But that is just wrong. The hash rate is totally irrelevant to the inner workings of Bitcoin.

happend with altcoins before. Since KGW is around doesn't happen anymore.
But Bitcoin doesn't have that.

The first question to ask is why would miners drop out?  That is what causes the drop in hashrate.  Miners are profit driven so it might seem reasonable to assume that a sudden drop in price would cause a bunch of miners to suddenly quit.  But keep in mind the price has been dropping throughout 2014 and did that cause a slowdown in mining?  No - just the opposite.  The hashrate continued to climb dramatically.  Now maybe a massive, sudden price crash could shake some miners loose.  Maybe. The other thing that could cause a massive drop in hashrate would be a shutdown of one or more mining farms due to disaster.  But consider the
massive mining farm fire a few months ago - how much did that affect hash rate?

But lets consider there is a sudden drop in hashrate - say 50%.  That means until the next difficulty calculation that blocks now take, on average, twice as long to confirm - or ~20 minutes.  Far from the "hours" discussed.  In fact, a 90% drop in hashrate would be on the order required, as this would make block take on average ~100 minutes, so it could take hours to get a confirmation.  But again, is that an expected drop?

And assume 50% of miners stopped mining - what about the remaining miners?  Well, if they decided to keep mining, the drop out of other miners would have zero affect on them.  Their hashrate and the difficulty remain unchanged, so their changes of finding a block are the same.  In fact, they get much better at the next difficulty calculation, so there is all the more incentive for them to keep mining (the sooner the difficulty changes, the sooner their share increases).  So if they didn't decide to leave for other reasons, other miners leaving wouldn't make them go,

So I don't think this is a concern.  Remember though that the point in time at which this happens matters.  It takes a full 2016-block cycle for difficulty to adjust, so it would be over two cycles before things settled down.  Of course, a random event would happen, on average, about half way through a block cycle, so the impact would be lessened that much sooner.

This is off topic, but I'll oblige...

In the IT world, when you have a large operation of servers, it's called a server farm, so to me it seems fitting to call a large operation of mining hardware a mining farm or an ASIC farm. Not to be confused with agricultural "farming", a farm is just a big place/operation. There are solar farms too.

To a certain extent the confirmation time for a transaction (time it takes for a new block to be mined) is going to go up. Depends on the drop in hash rate how much this is going to be. This may hurt the utility of Bitcoin a bit, but this problem is going to solve itself with the next difficulty-adjustment. Apart from that the core technology will mostly remain unaffected.

My take is a miner is running a small setup from home and a bitcoin farm is a giant factory full to the roof with shelves of ASICs.

It might sound as a joke to you but Dogecoin inflation rate is much lower today than bitcoin and will be even lower later (Litecoin inflation rate is even worse than bitcoin).

Dogecoin and bitcoin estimated inflation rate for the next 10 years:

2015: Bitcoin: 10.00% | Dogecoin: 5.20%
2016: Bitcoin: 9.09%   | Dogecoin: 4.94%
2017: Bitcoin: 4.17%   | Dogecoin: 4.71%
2018: Bitcoin: 4.00%   | Dogecoin: 4.50%
2019: Bitcoin: 3.85%   | Dogecoin: 4.30%
2020: Bitcoin: 3.70%   | Dogecoin: 4.13%
2021: Bitcoin: 1.79%   | Dogecoin: 3.96%
2022: Bitcoin: 1.75%   | Dogecoin: 3.81%
2023: Bitcoin: 1.72%   | Dogecoin: 3.67%
2024: Bitcoin: 1.69%   | Dogecoin: 3.54%

To learn more about Dogecoin visit:

https://bitcointalk.org/index.php?topic=800004.0;all

https://bitcoinwisdom.com/

As long as BTC price decline is gradual, but big corrections/reward halvings?  Sure we had them before, but the last halving kinda coincided with new tech--FPGA/ASIC miners.  Now quantum leaps like that are pretty unlikely, and ASICs can't be sold off on EBay like vid cards. If mining costs = ~value of the coins mined during the halving, and if there's a more profitable SHA256 clonecoin to shift the hashpower to...
Not saying will happen, but not impossible.  

Go talk about how it's impossible in the other 7 billion threads I really don't care if you think it's possible or not.  If you think this is a FUD thread you need to take your head out of your ass.

Same difference.  The massive farms would be forced to shutdown.

The idea of transactions slowing down and killing BTC is utterly silly.  It would recalculate not even bother worrying about.

IMO it would be the start of a bull run as everyone mining would be hording.. well I figure they would be anways.

FUD FUD FUD

Why would there be a total price collapse? The reason the price has sat at 300 is because the market is pricing BTC at 300. Miners won't dump and destroy their business model.

Keep dreaming

the price of ASICs drops to almost nothing. people with access to free or near-free electricity (e.g. icelanders) buy the ASICs and start mining. people who are already mining with free electricity just keep going.

not a big deal.

The difficulty is rising again, profit driven farms might go underwater and close down, but they might become a perfect place to hide money: You send money to buy mining rigs and get fresh bitcoins out of it, so I guess the farms will still thrive until further regulation fall upon mining industry

How about a hypothetical slow bleed down to double digits. Not so Hollywood, but much more likely

If we saw a massive drop in the hashrate for whatever reason the protocol would probably would be get forked so that the difficulty would adjust ahead of schedule on a one time basis. We would probably need to see a very large drop in the hashrate, likely exceeding 50% in a less then two week period.
assuming the network continues to have 100% luck then yes a drop in the hashrate will cause the confirmation time to increase
The miners should have at least two fallover (or backup) pools in the event the primary pool is not working. The miners should switch to other pools automatically and without the intervention of their owners/operators

certainly interesting ... need to get coldstorage more easily accessible right NAO!