Topic: If there's a huge drop in hash power.. - page 2. (Read 2180 times)

?

The hash power is still increasing.

Right now any NEW equipment will likely not generate a positive ROI, but on existing equipment marginal profit (bitcoins mined) still > margin expense (cost of electricity).

I'm talking about the future, when the difficulty gets even higher and bitcoin takes another big dive, and people start pulling the plugs on their ASICs.

The drop in hash power doesn't surprises me. Bitcoin mining is extremely unprofitable now. Even if you get the mining rigs for free, the profit will not cover even the electricity expenses.

Since the introduction in ASICs, there's never been a drop big enough where energy cost of mining > value of btc produced.

You can bet those datacenters spending thousands of dollars in electricity a day will turn off their ASICs if it turns unprofitable.

History shows that statement is false.

The solar system is a VERY large place.  When something "just misses" us on that scale, it frequently isn't very close at all.  On the other hand, given the number of people that worry about things like a bitcoin address collision, I suppose that getting hit by a solar coronal mass ejection is a much more likely event.


I think you need to take some time to read the Bitcoin Whitepaper written by Satoshi Nakamoto before you spend any more time guessing at how it works.


Actually, only about 3,600 new bitcoins per day. (slightly more while hash power is outpacing difficulty increase).


That assumes that all miners immediately sell all the bitcoins they mine.  I personally know of several miners that refuse to sell any bitcoins below $800 per bitcoin.

Other than the global disaster scenario the only other way that this could happen is through concerted government action.  Right now that would be difficult, because mining is spread out over a large number of miners across many jurisdictions.

However this seems likely to change in the future.  Imagine a future where 99% of mining power is held by a five giant mining companies.  Shutting all five companies down simultaneously would be pretty easy for a super power.  Then the network has only 1% of the hashing power, which means that it takes four years for the difficulty to reset.

Until those four years are up the smaller miners are not able to mine at a faster rate.  They would be able to charge more in transactions, so if nothing else changes it would probably still be worth it for them to mine.

Except that something else has changed: confidence in bitcoin is shaken.  The value of a bitcoin drops dramatically.  The remaining miners are unable to pay for electricity.  90% of them quit, with the remaining 10% continuing even though they are losing money.

So the difficulty won't reset for 40 years.  40 years to mine 2016 blocks.  That's one block per week.  Something to think about.  I'm hoping that mining companies and the like do their best to harden themselves against a scenario like this.

You meant the price of BTC? No, I don't think so. They will keep mining, they just won't sell, which will bring the price back up instantly.

If you think about it's a miracle the price is staying up as it is given that every single day 5,000 new coins are created and somebody has to put in $2M every day just to keep the rate up. Although nowadays it's not really staying up.

and the difficulty would still go up like it has every single change for the last year

If btc has a 90% drop in a short period of time, a lot of miners would turn off their equipment

Apparently one of those just missed us rather recently, according to Cosmos.

I can imagine a realistic scenario when 95% of hash power disappears in a second.

A super massive solar coronal mass ejection could fry electronics on Earth and take out power in many areas for weeks. But if that happened Bitcoin's breakdown would be the least of our worries.

A sudden, instantaneous rise in electricity costs across the entire globe all at once to levels that cause all but 5% of the miners in the world to immediately shut off their equipment?  You consider this "realistic"?


If 95% of the miners shut off their equipment, the remaining miners would see an increase of 20 times as many bitcoins for each block that they solve. This increase in reward would attract additional miners that either have access to very cheap electricity, or who aren't very good at math, or who put a premium on the idea of not dealing with an exchange to acquire their bitcoins.  These additional miners would result in an incremental decrease in time between blocks.


True, if that many miners all shut off their equipment, and there was no addition of miners from anywhere in the world, then blocks would be slow for a while.  If a significant enough percentage of bitcoin users became seriously concerned about this, a new client could be released that would temporarily reduce the difficulty.  The bitcoin network/blockchain would fork if 100% of the users didn't switch to the new client, but if it was a serious problem, it should be possible to get 90% or more of the network to switch.

On the assumption that it happened (although it is not even remotely likely to occur) you are right in saying it would simply lead to an increase in the time between blocks and if nothing was done then difficulty would be retargeted back to achieve ~10 min block times.

My ASICS will run until they grind themselves back into sand. Electricity rate/difficulty/exchange rate be damned.

If the hash power were to drop, It'd be my fault since I own 95% of all miners out there.

JK, please don't try and rob me

Bitcoin has many strengths. One is being decentralized, another is being market driven, and still another is being global. These factors make it incredibly resilient. Any one factor which might affect it, such as totalitarian governments (e.g. N. Korea), localized pricing pressures, or environmental disasters (like Chile's recent tsunami), etc. won't really affect the whole. There are multi-million dollar mining operations intentionally positioning themselves to take advantage of energy costs. There may be slight network quirks from time to time (like 2 hr + confirmations), but you'd never expect to see 95% of global hashing power vanish suddenly.

Not going to happen, unless you believe in a big magic internet kill switch.   

I think it's more disturbing to think that zombie miners are out there that continue running, making money for the electric power providers and not their owners.

Sure, this is what happened with Catcoin. It could cause a vapor lock type effect, however the remaining miners could opt to change the difficulty retarget level or something to try and bring it back. Which could lead to massive ping-pong but that's another issue.

yes, it could happen, but probably wont

Wouldn't that cause issues?

Like let's say, the difficulty just reset, so we have 2016 blocks to go till the next change. At the current hash power, it'll take ~ 10 minutes / block like it's supposed to.

And for whatever reason, 95% of the hash power is taken off the network (which is NOT totally unrealistic. If there's a rise in electricity costs or a decline in bitcoin prices to the point where power cost > value of bitcoins mined, a lot of ASICs will be taken offline, since even if you wanted the bitcoin, it'd be cheaper to not run the ASIC and buy the bitcoin instead). The difficulty is still the same, and will remain the same for 2016 blocks. If 95% of the GH disappears, then each block will now take 200 minutes to find on average, for the next 280 days.