The negative impact of mining farms - page 9.

Capt Drake

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Quote from: brg444 on October 24, 2014, 04:28:13 PM

Quote from: MrBig on October 24, 2014, 04:18:02 PM

exactly.

I know people hate Marc Andreesen for saying this but the likely scenario in the long run is enormous mining syndicates around the world being regulated in such a way as to PROTECT the Bitcoin network and discourage monopolies.

Regulated by whom? A centralized authority? Syndicates aka mafias? I can only speak for myself, but I sure wouldn't trust them.

Regulated by each and everyone of the countries where they are based.

Again, understand that I'm not referring to regulation that would allow for coercion of mining syndicates into maliciously using their power but regulation that would limit their hashing growth so as to secure the decentralization of the now global (in this scenario) Bitcoin economy.

You'd have no choice but to trust them.

[/quote]

You simply can't regulate this market, it's global and anonnymous, you don't know who is mining and where he is.

raid_n

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Quote from: brg444 on October 24, 2014, 04:28:13 PM

Regulated by each and everyone of the countries where they are based.

Again, understand that I'm not referring to regulation that would allow for coercion of mining syndicates into maliciously using their power but regulation that would limit their hashing growth so as to secure the decentralization of the now global (in this scenario) Bitcoin economy.

You'd have no choice but to trust them.

I strongly disagree with that idea. The moment you see a regulation of who gets to post new valid blocks is a big red warning sign.

brg444

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Bitcoin replaces central, not commercial, banks

Quote from: raid_n on October 24, 2014, 04:27:03 PM

Quote from: brg444 on October 24, 2014, 04:11:52 PM

exactly.

I know people hate Marc Andreesen for saying this but the likely scenario in the long run is enormous mining syndicates around the world being regulated in such a way as to PROTECT the Bitcoin network and discourage monopolies.

I don't necessarily see it that way. Most likely there will be both, giant mining farms, as well as smaller enterprises that use local advantages such as cheap energy or technological advantages such as more efficient chip designs.
The great thing about bitcoin is that the blockchain and mining was specifically designed around allowing an anonymous creation of new blocks/coins through PoW.
At least for now it is pretty hard to regulate who can or cannot participate in mining.

[edit] the irony in this is that we might observe something similar to the arms race of the cold war in mining if bitcoin gains wide adoption

Cheap energy and technological advantage are things that can be leverage much more seriously by giant mining farms than smaller enterprises.

One alternative that should be kept in mind is appliance mining where energy consumption/heat from the miners are effectively recycled for other purposes. This could certainly improve and increase decentralization.

brg444

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Bitcoin replaces central, not commercial, banks

Quote from: MrBig on October 24, 2014, 04:18:02 PM

exactly.

I know people hate Marc Andreesen for saying this but the likely scenario in the long run is enormous mining syndicates around the world being regulated in such a way as to PROTECT the Bitcoin network and discourage monopolies.

Regulated by whom? A centralized authority? Syndicates aka mafias? I can only speak for myself, but I sure wouldn't trust them.
[/quote]

Regulated by each and everyone of the countries where they are based.

Again, understand that I'm not referring to regulation that would allow for coercion of mining syndicates into maliciously using their power but regulation that would limit their hashing growth so as to secure the decentralization of the now global (in this scenario) Bitcoin economy.

You'd have no choice but to trust them.

raid_n

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Quote from: brg444 on October 24, 2014, 04:11:52 PM

exactly.

I know people hate Marc Andreesen for saying this but the likely scenario in the long run is enormous mining syndicates around the world being regulated in such a way as to PROTECT the Bitcoin network and discourage monopolies.

I don't necessarily see it that way. Most likely there will be both, giant mining farms, as well as smaller enterprises that use local advantages such as cheap energy or technological advantages such as more efficient chip designs.
The great thing about bitcoin is that the blockchain and mining was specifically designed around allowing an anonymous creation of new blocks/coins through PoW.
At least for now it is pretty hard to regulate who can or cannot participate in mining.

[edit] the irony in this is that we might observe something similar to the arms race of the cold war in mining if bitcoin gains wide adoption

Mervyn_Pumpkinhead

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Quote from: MrBig on October 23, 2014, 06:21:31 PM

Just finished reading this article: http://mobile.bloomberg.com/news/2014-10-21/bitcoin-miner-ditches-clients-to-chase-2-billion-coding-prize.html

Basically the co-founder of KnC, Sam Cole talks about small-time mining operations becoming obsolete as their profit margins shrink and they get replaced by mega-mining farms. He continues to talk about the $2 billion in btc that will be mined in the next few years and expresses his company's intention to milk as much cash from this cow as possible.

What is interesting to note here is that this guy is measuring the profits in $$$, which is indicative that his company doesn't care for btc and are in it for the potential fiat profits. He doesn't say that there's x amount of BTC up for grabs because he and his investors are only interested in the cash/fiat that can be made from mining BTC. Another thing to note is that he mentions their cost per unit is significantly below $400.

So basically these scumbags have a lot of hashing power, fiat, and probably BTC to manipulate the market.

An snake oil salesman actually telling the truth on how it really is.
Well, that's something you don't see every day..

brg444

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Bitcoin replaces central, not commercial, banks

Quote from: MrBig on October 24, 2014, 04:18:02 PM

Quote from: brg444 on October 24, 2014, 03:53:18 PM

Quote from: MrBig on October 24, 2014, 03:49:01 PM

That only applies to the third question. Hackers don't care about the miner's incentive, and neither do governments. Besides what we're seeing right now is less companies building mega-mining farms and a more uneven distribution of hashrate.

Nope, wrong again. In reality there are more and more mega-mining farms being built. Just look at the hashing distribution right now and where we were this summer with GHash.

As more of these continue being built the risk continues to be distributed effectively rendering hacking attacks and/or government takeover ineffective.

Is GHash a mining farm or a pool? If it's a pool then your point carries no weight as miners simply pointed their machines to other pools thus decreasing GHash's hashrate. A giant mining pool is not the same as a giant mining farm.

Ghash is a pool but I'm sure they have their own farms as well.

Anyway, this irrelevant to the situation and I find it a bit strange for you to point this out since it effectively defeats your point as well.

If Ghash is not a concern for you then we can safely say no private, unique entity's mining farm as even approached the necessary 51% hash rate. Considering more mining farms are being set up by other individuals we can safely say the danger of mining centralization is decreasing every day

MrBig

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Quote from: brg444 on October 24, 2014, 03:53:18 PM

Quote from: MrBig on October 24, 2014, 03:49:01 PM

That only applies to the third question. Hackers don't care about the miner's incentive, and neither do governments. Besides what we're seeing right now is less companies building mega-mining farms and a more uneven distribution of hashrate.

Nope, wrong again. In reality there are more and more mega-mining farms being built. Just look at the hashing distribution right now and where we were this summer with GHash.

As more of these continue being built the risk continues to be distributed effectively rendering hacking attacks and/or government takeover ineffective.

Is GHash a mining farm or a pool? If it's a pool then your point carries no weight as miners simply pointed their machines to other pools thus decreasing GHash's hashrate. A giant mining pool is not the same as a giant mining farm.

Quote from: brg444 on October 24, 2014, 04:11:52 PM

Quote from: raid_n on October 24, 2014, 04:04:41 PM

What needs to be realized is that a high value bitcoin will give a tremendous economic incentive to invest into mining.
At 3600 coins a day even at current prices we are looking at up to half a billion dollars a year of new value created (until halving)

Now you can fill in the blanks on how much might be spent to gain a piece of that pie.
Lets face it. If bitcoin gains global adoption mining will be a multi billion dollar industry.

Does this mean the current value is unsustainable? I really don't know.
The numbers speak for themselves. Either we will see a very big change in mining or a very big change in value.

exactly.

I know people hate Marc Andreesen for saying this but the likely scenario in the long run is enormous mining syndicates around the world being regulated in such a way as to PROTECT the Bitcoin network and discourage monopolies.

Regulated by whom? A centralized authority? Syndicates aka mafias? I can only speak for myself, but I sure wouldn't trust them.

brg444

hero member

Activity: 644

Merit: 504

Bitcoin replaces central, not commercial, banks

Quote from: raid_n on October 24, 2014, 04:04:41 PM

What needs to be realized is that a high value bitcoin will give a tremendous economic incentive to invest into mining.
At 3600 coins a day even at current prices we are looking at up to half a billion dollars a year of new value created (until halving)

Now you can fill in the blanks on how much might be spent to gain a piece of that pie.
Lets face it. If bitcoin gains global adoption mining will be a multi billion dollar industry.

Does this mean the current value is unsustainable? I really don't know.
The numbers speak for themselves. Either we will see a very big change in mining or a very big change in value.

exactly.

I know people hate Marc Andreesen for saying this but the likely scenario in the long run is enormous mining syndicates around the world being regulated in such a way as to PROTECT the Bitcoin network and discourage monopolies.

raid_n

sr. member

Activity: 269

Merit: 250

What needs to be realized is that a high value bitcoin will give a tremendous economic incentive to invest into mining.
At 3600 coins a day even at current prices we are looking at up to half a billion dollars a year of new value created (until halving)

Now you can fill in the blanks on how much might be spent to gain a piece of that pie.
Lets face it. If bitcoin gains global adoption mining will be a multi billion dollar industry.

Does this mean the current value is unsustainable? I really don't know.
The numbers speak for themselves. Either we will see a very big change in mining or a very big change in value.

brg444

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Activity: 644

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Bitcoin replaces central, not commercial, banks

Quote from: MrBig on October 24, 2014, 03:49:01 PM

That only applies to the third question. Hackers don't care about the miner's incentive, and neither do governments. Besides what we're seeing right now is less companies building mega-mining farms and a more uneven distribution of hashrate.

Nope, wrong again. In reality there are more and more mega-mining farms being built. Just look at the hashing distribution right now and where we were this summer with GHash.

As more of these continue being built the risk continues to be distributed effectively rendering hacking attacks and/or government takeover ineffective.

MrBig

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Quote from: brg444 on October 24, 2014, 03:37:25 PM

Quote from: MrBig on October 24, 2014, 03:06:01 PM

Quote from: Capt Drake on October 24, 2014, 01:11:36 PM

Competition only leads for the best fitted miners, like nature.

So yes, the system was designed around this concept.

If this is the case, then it's a flawed system. What happens when mining is controlled by a small handful of companies and governments decide to shut them down or seize control of them? What happens if they get hacked? What happens if they go rogue? They're not pools that people can just pull their hashing power away from.

Remember that Bitcoin did not solve the Byzantine Generals problem but merely created an economic incentive for actors to behave.

The fact is, ASICs and professionalized mining ultimately improves decentralization.

https://gist.github.com/oleganza/bd14f60643395706efaa

Quote

A reader asked me over email recently:

Have you posted anything or had any thoughts on Ghash.IO situation?
Nothing on this. I think it's just early volatility in bitcoin space. Some company (CEX) got serious about making a private mining farm and made a whopping share. Others will follow soon.

The dirty little secret of the blockchain is that it's not secure until increasing the hashrate by even 1% is an enormous economic feat. Currently it's not impossibly expensive to build your own farm with significant share - therefore the network is not very theoretically secure. Even if every existing pool had no more than 10%, you can't be sure that some guy does not unleash enormous hashing power at once and reverts some transactions.

When more companies start building private farms (and they will, it's the only cost-efficient way to mine; individual miners will soon disappear), you'll see more even distribution of the hashrate, but most importantly, the growth of hashrate will get slower. Because the slower it grows, the more robust the proof-of-work chain is.

That only applies to the third question. Hackers don't care about the miner's incentive, and neither do governments. Besides what we're seeing right now is less companies building mega-mining farms and a more uneven distribution of hashrate.

brg444

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Activity: 644

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Bitcoin replaces central, not commercial, banks

Quote from: MrBig on October 24, 2014, 03:06:01 PM

Quote from: Capt Drake on October 24, 2014, 01:11:36 PM

Competition only leads for the best fitted miners, like nature.

So yes, the system was designed around this concept.

If this is the case, then it's a flawed system. What happens when mining is controlled by a small handful of companies and governments decide to shut them down or seize control of them? What happens if they get hacked? What happens if they go rogue? They're not pools that people can just pull their hashing power away from.

Remember that Bitcoin did not solve the Byzantine Generals problem but merely created an economic incentive for actors to behave.

The fact is, ASICs and professionalized mining ultimately improves decentralization.

https://gist.github.com/oleganza/bd14f60643395706efaa

Quote

A reader asked me over email recently:

Have you posted anything or had any thoughts on Ghash.IO situation?
Nothing on this. I think it's just early volatility in bitcoin space. Some company (CEX) got serious about making a private mining farm and made a whopping share. Others will follow soon.

The dirty little secret of the blockchain is that it's not secure until increasing the hashrate by even 1% is an enormous economic feat. Currently it's not impossibly expensive to build your own farm with significant share - therefore the network is not very theoretically secure. Even if every existing pool had no more than 10%, you can't be sure that some guy does not unleash enormous hashing power at once and reverts some transactions.

When more companies start building private farms (and they will, it's the only cost-efficient way to mine; individual miners will soon disappear), you'll see more even distribution of the hashrate, but most importantly, the growth of hashrate will get slower. Because the slower it grows, the more robust the proof-of-work chain is.

raid_n

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Quote from: MrBig on October 24, 2014, 03:20:18 PM

Quote from: raid_n on October 24, 2014, 03:12:07 PM

Wait, didn't you get the memo that the supply of new bitcoin is diminishing over time? [edit]
And absolutely nothing is stopping you from mining bitcoin right now or starting a business that produces asic miners.

Maybe you'd like to donate $20 or $30 million to him so he can get his mining business going?

If I had the money I might try that myself. The point is if he can convincingly sell his business plan there will be investors.
Since when was there a guarantee for profit?
How much should an individual be able to mine? You do realise that if something is profitable there will be an incentive to try and expand to gain even more profit?
Since everyone will be doing that the difficulty will increase ultimately diminishing profits for everyone again.

You can't have a valuable and widely used bitcoin while being able to substantially mine as an individual with low end hardware. At least not in a free market

MrBig

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Quote from: raid_n on October 24, 2014, 03:12:07 PM

Quote from: Cluster2k on October 23, 2014, 07:48:23 PM

This is how bitcoin slowly dies from here. What started as a chance for everyone to generate their own bitcoins and participate in the economy now turns to a few data centers producing bitcoins thus forcing new users to purchase new bitcoins from them. We've traded fiat currency controlled by a few central banks to bitcoin controlled by a few data centers.

Meet the new 1%. Slightly different to the old 1%, but they're still there.

Wait, didn't you get the memo that the supply of new bitcoin is diminishing over time? [edit]
And absolutely nothing is stopping you from mining bitcoin right now or starting a business that produces asic miners.

Maybe you'd like to donate $20 or $30 million to him so he can get his mining business going?

raid_n

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Quote from: Cluster2k on October 23, 2014, 07:48:23 PM

This is how bitcoin slowly dies from here. What started as a chance for everyone to generate their own bitcoins and participate in the economy now turns to a few data centers producing bitcoins thus forcing new users to purchase new bitcoins from them. We've traded fiat currency controlled by a few central banks to bitcoin controlled by a few data centers.

Meet the new 1%. Slightly different to the old 1%, but they're still there.

Wait, didn't you get the memo that the supply of new bitcoin is diminishing over time? [edit]
And absolutely nothing is stopping you from mining bitcoin right now or starting a business that produces asic miners.

MrBig

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Quote from: Capt Drake on October 24, 2014, 01:11:36 PM

Competition only leads for the best fitted miners, like nature.

So yes, the system was designed around this concept.

If this is the case, then it's a flawed system. What happens when mining is controlled by a small handful of companies and governments decide to shut them down or seize control of them? What happens if they get hacked? What happens if they go rogue? They're not pools that people can just pull their hashing power away from.

RoadStress

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There are 3600 bitcoins created every day no matter what. What do the large farms have to do with it?

NotLambchop

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Quote from: Capt Drake on October 24, 2014, 01:11:36 PM

Competition only leads for the best fitted miners, like nature.

So yes, the system was designed around this concept.

It depends on what you wish to succeed--Bitcoin or "best fitted miners."
But yeah, if megamines kill Bitcoin, it doesn't deserve to survive.

Capt Drake

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Competition only leads for the best fitted miners, like nature.

So yes, the system was designed around this concept.

Topic: The negative impact of mining farms - page 9. (Read 10799 times)