Topic: Isn't Mining Economically Retarded? - page 2. (Read 5100 times)

You're saying miners will drop out because they can't compete, but
they'll somehow be able to jump in later (when other miners drop out)
and successfully attack the network?   Yeah right.  Even if  they
turn back on, they will make more money mining than attacking.
Attacking Bitcoin so another coin can rise?  Never gonna happen.


This doesn't make sense either.  Miners are ALWAYS dumping
coins on the market.  So what?

You will be attacked in 5 - 4 - 3 - 2........

The cost of mining is why bitcoin will fail. Miner producers are the only ones that win this game.

The only way this mining system works is if the price of BTC rises. It's like a ponzi.

Difficulty just went down for the first time in 2 years which shows mining is tapped out. If the price of BTC goes up, the hashrate will increase and everything works. BUT if the price of BTC falls, here's what happens.

Say it falls to $100 over the next year and a half. The hashrate will drop to 30% of what it is now. THEN ADD IN THE REWARD HALVE AT THAT TIME, the hashrate will drop another 50% on top of that. So we will be sitting at 15% hashrate of what we are at now which would seem fine and dandy because the network worked when it was only 15% of the size it is now. The problem is back then, there wasn't an available supply of power to attack the network. The miners didn't exist yet.

If we went to 15% now, there are loads of farms who had shutdown miners who could flip a switch and turn them back on and attack the network with ease. Why would they do this? Maybe they invest heavily in the "next" coin and make more money on that when they crush BTC and everybody moves to something else. They could make way more money doing that then having a warehouse full of worthless doorstops.


What is also stupid with mining is with every increase in BTC there is severe overhead pressure because miners dump coins on the market to buy more miners. Any spike in BTC will then be capped until mining is made unprofitable again.

Well it's less retarded than mining uneconomically :S

1. I bet before a miner sold, they were use it to mine bitcoin & when it was sold, they got profit from mining & sold the miner. Double profit
2. As same as with number 1, they got more profit & they pass the risk to the user.
3. I agree too

And i think mining can't raise up bitcoin price too much :
First, the person/company have to sold their bitcoin to cover up mining tools & maintenance fee
Second, some miner just want to get profit in fiat, so they always sell the bitcoin & bitcoin price went down
Last, Miner only mine if they can get profit

No - it seems rather boneheaded.

To get 200K coins, you would need to spend nearly two months as being the only miner in existence. (3600 coins/day * 60 days ~= 200Kcoins). As if anyone could be 100% of all mining. You really think it would be harder to buy 200K on exchanges over two months?

Because by definition you will not be getting fresh clean coins. You will be getting coins with a history.

Bitcoin demand can be fulfilled by either mining or purchasing, when one of the option is cheaper, more capital will flow to that direction. So mining cost always adjust itself to be close to the exchange rate

The interesting thing is: If you dramatically improve the mining efficiency, you can scale your production and take a much larger market share, thus drive other miners to unprofitable, and extend the life time of your equipment. And this will also bring centralization. To counter this effect, the rest of the community will try to achieve more and more efficient mining all over the globe, thus raise the difficulty during the process, that is a fight for keeping the system decentralized, not for the profitability, so it will eventually send the mining cost higher than exchange rate

But this is really costly way to earn clean fresh coins. Why no go to localbitcoin.com and do the trading face by face without going through any third party?

They are believers. They know Bitcoin will go up this decade because they aren't retarded, and they can afford the mining due being on a good position to not be fried with electricity bills etc. Its a sum of opportunities that put you on a good spot to be an efficient miner.

I think he is forgetting the fact that with PoW you generally need to invest in a lot of very expensive equipment in order to "buy" bitcoin via mining. Also any bitcoin that you "buy" will not be "delivered" instantly like it will on an exchange, but will be "earned" over several months

Thanks for not engaging in thought experiments because that's not the point. OK, let's make it a hypothetical. Pretend that someone created a decentralized world of warcraft. Updates were created on github and game players grinding away voted on the updates. So now it is DECENTRALIZED.

Better yet lets forget WoW. Chess instead. Play chess, beat the previous champ and win a block. You have the option of using a human player or computer. The game would be timed so transactions are validated every ten minutes. Would this be an acceptable PoW?

Mining exists to secure the blockchain, it was never intended to be a money hose for industrial scale hardware junkies. And since BTC mining is so heavily centralised thanks to a few huge operations and a few big pools, it isn't even much use any more for its intended purpose. BTC hasn't been credibly 'decentralised' for years.

The only PoW coin that has actually useful -ie, distributed- mining is Spreadcoin, the block structure excludes pools, it's solo only. It isn't perfect, it doesn't preclude large solo farms, but it's a big step in a very necessary direction. Every other PoW coin is a complete joke from a security POV.

This is war for freedom, son!
Things are a bit rough here before they settle.

You might do it on your own, or join a star alliance

So you're saying this is an arms race and I need to get myself a shotgun and a hacksaw because this is serious business?

Well, whether its "reasonable" or not depends on how you look at it.

But if you look at what's actually happened in the retail consumer
mining gear market, there's always been tons of delays and the whole
"game" is how fast can you get your hands on the gear.  Historically,
a lot of people have lost money because by the time they got the
gear, it was outdated.  That's a natural consequence of the arms-race
nature of mining.  And, it makes sense that it would be that way
because why would a company sell you a piece of gear at a price
that would give you an easy profit, when they can run the machine
themselves?  That doesn't make sense business-wise.  The reason
they sell it to you is because there is no easy profit.  By the time
you get it, its no longer efficient.  There is a conflict of interest
and I think is part of what the OP is alluding to.  

Mining is a highly competitive, serious business,
and is completely commoditized (your hashes
are just as good as mine).  Only the most
efficient lowest cost miners will win, and that generally doesn't
include your retail consumers.  Some people have goten lucky
and gotten their machines early, or bought just before the price
went up, but that is back to the point of why not just buy Bitcoin?
It is much less risky to do that than get into the mining business.

In the case of GPU mining you always can sell the hardware if the operation is non proffitable. You probably would get around 50% at least in return. In the case of ASICs this may not be true (i.e. BFL).

And yes, mining is economically retarded, DPoS rocks.

http://letstalkbitcoin.com/blog/post/lets-talk-bitcoin-155-beyond-bitcoin
http://wiki.bitshares.org/index.php/Main_Page

The WoW Gold analogy is dumb. WoW Gold does NOT, in any way shape or form, reflect human labor - it is, rather, a CENTRALIZED fiat currency minted by one mid-size US company in any quantity Blizzard chooses.

So it's unreasonable for me to expect paid for computer hardware to be delivered because of the fact there's a competitive market due to the machines being profitable?

That's very good point, franky!

This separates PoW from other systems, where all money are assigned to a group of participants and the most of it might simply be "not for sale". Mining allows to get as much of it as there is still under the digital crust and after that still get what is available in the flow of transactions.