Topic: Volatility, ain't seen nothing yet, 10K to 1M in 1 year??? - page 4. (Read 9599 times)

So you're arguing that there is a cap on mining expenses, that I agree with.
In the long run, when only fees constitute the reward, the volume of transactions will be the major contributor to mining expenses, not the market cap.

However consider this scenario, if current controllers decide to freeze certain super rich addresses, then those people might eventually wake up and decide to fight for control at a huge loss in order to save at least something.

Keeping money and control separate has this interesting dynamic to it.

Let's stop playing games, let's stop watching movies, these are all very wasteful activities.
We should just sit on our couches quietly and get our food for free.
This way the world will be greener and everyone happier

The obvious relation both I and dinofelis pointed to is this:  the cost of mining can not substantially exceed the price of BTC mined--according to satoshi, math, logic, and common sense. 
The market cap is (price per BTC) * (total number of BTC created).
Enjoy the gifs.

So, counter-intuitively, there is a possibility for gas guzzling cars to make world energy greener, by rapidly exhausting the world's oil supply and creating a HUGE mass market for solar and wind-powered vehicles

I liked those, thanks

I'm not denying there is a relation, just that it's not very obvious.
If the market cap is huge, but no one is sending money, there will be no fees for miners to collect, and the whole mining expenses will be negligible. But the truth is of course somewhere in the middle.

And this is why I post gifs

The efficiency of miners is improving though, it might be around a watt a gigahash installed on average at the moment, but with the older hardware getting turned off, it's going to approach 0.5W/gh soon, the next gen 16nm is supposed to be coming in at 0.2W/GH beginning next year. We could be down to 0.1 before the next block halving.

The thing about bitcoin though, is it is VERY cheap to export. Cheaper actually than electric power is to move, if the power can be produced 100s of miles away from population centers, industrial areas etc. There's a lot of potential areas for wind turbines, solar, hydro, tidal, geothermal etc that are just too far away from use points to consider tapping into. If there is a huge and insatiable demand for wind turbines and solar, sure an initial price spike on those, but it would actually lead to cheaper wind and solar plant for everyone, due to economies of scale and mass market factors.

There's also the fact that nuclear power plants are very hard to run to capacity, that's because you can't just turn them on and off, they need to be run at the output required to provide "base load". Reactive load is supplied by fossil fuel burning plants (One reason Earth hour is bad, they have to fire up more fossil fuel plants for the load spike when everyone turns the lights back on! ) Anyway, after about midnight, there is "too much" electricity in the system and spot electricity market prices tend to go negative until about 6 AM. Power utilities world wide would love to have something to soak up excess load on demand. They may see the benefit in putting a huge bitcoin mine next to a nuke plant as a load sink, then they can finally run that spendy plant at full capacity, and dump load into bitcoins overnight.

Anyway, there will be places where power can be got 10x cheaper than anywhere else but require considerable site investment. These places will get 10x the mining power anyone else can use. Due to limited amount you can put in one place, this will ensure decentralization geographically.

What I'm trying to say is, that the bitcoin price will be wayyyy above the actual electricity cost to mine, but be close to what it would cost to mine at 15 cent a kWh or so. The difference would be underutilised power resource development costs, and equipment replacement costs, with the mines betting that they get to double up every 18months due to moores law.


So, counter-intuitively, there is a possibility for bitcoin mining to make world energy greener, just by creating a HUGE mass market for solar and wind plant, and by allowing fossil fuel plants to be displaced by exchanging their ability to ramp load quickly, for an ability to dump load quickly.

Thank you for highlighting that, but it's not my quote, it's NotLambchop's.

Of course.  But if you adhere to the S-curve adoption, the bending point (the middle of the S) will be somewhere in the not-too-far future according to that viewpoint (which is based upon theories of good money drives out bad ones, and so on).

Now, if the S-curve comes in before 2017, we are at 10% inflation.  If the S-curve comes in before 2021, we are at 5% inflation.  If the S-curve comes in before something like 2025, we are at 2.5% inflation.

So if "general adoption in the world" happens before 2017, ALL of the world's electricity will go to mining  
If "general adoption in the world" happens before 2021, more than HALF OF THE WORLD's electricity will go to mining.
And if it happens before 2025, about a third of the world electricity production will go to mining.

Simply because the reward is SO HIGH, that it is beneficial to consume more electricity to mine.

If the full world economy runs on bitcoin (S curve, remember) a coin should have the value of what is now about $3 million.  That's namely the amount of M2 fiat that circulates in the world right now if all coins become liquid.  If there are still hodlers at that moment, coins will even be worth more under total adoption, because a smaller amount of coins than the full supply will have to carry all of the current M2 fiat worth.

If you mine before 2017, you'll obtain 3600 coins a day, which is the worth of 10 billion dollars of right now.  More than the price of a nuclear power plant A DAY.  The incentive to mine is HUGE.

So, if you adhere to the S-curve theory and "good money drives out bad money", there's no escaping of huge power consumption for mining if it happens before 2025.

So what logical options do you take ?

A) the S-curve is wrong

B) good money doesn't drive out bad money

C) it will happen after 2025 (then how will it keep up until then ?)

D) yes, miners will use up a large chunk of all electricity in the world !




The reward is given by the coin price, and hence by the market cap.  If a day of mining brings in the equivalent value of 10 billion, you are going to be willing to use up a lot of electricity to get that value  in your pocket, no ?

If you run p2pool (with your own local node) then pretty much anyone can retain control.  Although some hardware has problems with stales.

In fiat, control is fixed and cannot be challenged, different fiats can compete though.

In PoW, control is a tough competition, that ensures robustness.
You simply don't have time and resources to start screwing people over with their money if you're busy fighting for control.
And by the time you think you've established a monopoly, a shadow player emerges and obliterates your efforts with some unforeseen tech. That's the freedom in Bitcoin, that's the beauty of it.


Actually, I am not.
Just felt that certain points of view have recently overwhelmed this forum and thought that balance needed to be restored.
Balance is the key!

>...I myself might not be in position to fight for control over the system, the rules of the game are such that other players always will...

That's like the bleakest thing ever.  What, exactly, is worth looking forward to here?  Sounds no different than fiat at its worst.
Nvrmnd, keep bein' rebel

You can certainly earn your bitcoins or buy them, I have no problem with that.


Yes, but I can withdraw my hashpower at any moment, so there is that.


While I myself might not be in position to fight for control over the system, the rules of the game are such that other players always will. That's good enough for me.

Now we're getting to the root of your misunderstanding.
If you can predict that Bitcoin will be worth more in the future, you should simply buy it at current price [below $300 in my example], and not mine it [at substantially more than $300 in my example].
Because math.


Unless you're a pool operator or a megamine [solo mining], it's the pool that has control, not you.  You're just providing the hashpower & getting paid when a block is solved.


Bitcoin is no more freedom than BTCeanie BTCabies.  Stop gulping that Kool Aid.

Mining is the only truly anonymous way to get Bitcoin so some people (who buy illegal shit) would be prepared to pay more to mine coins.

If my motive is profit, then the answer is certainly "no", unless I'm too smart and can predict the value increase in the future.
If my motive is getting a share of control over the system, then I might consider doing this even at a loss.
If I don't need a share of control myself, I might still wanna compete for it, so that it doesn't get concentrated in single hands.

Freedom has costs of defending it, you might consider doing it at a loss sometimes, but not all people understand it.

Still not sure what you're trying to say.
Maybe if you could start by answering my question: "Would you spend $300 to mine a coin worth substantially less than $300?"

In a balanced PoW system mining is a break-even game, it doesn't matter if 1 BTC is woth 300$ or 10k.
If you are, as Bitcoin user, satisfied with the quality of control over transactions, you don't need to mine Bitcoins.

If you want to challenge the controllers though, you might want to crowd-fund your own farm, or develop some innovation in this space. As adoption and the market cap increases, the mining market can grow to reflect the growing importance of control over the system, but it doesn't have to match it in any way.

In an extreme case a single computer with network's difficulty equal to 1 will be able to handle all of the transactions regardless of the market cap, only the amount of competition for control over the system will determine the cost of mining and future network's difficulty.

Yeah, I know.  Limited supply.  That's what made BTCeanie BTCabies valuable...

"The company's strategy of deliberate scarcity, producing each new design in limited quantity, restricting individual store shipments to limited numbers of each design and regularly retiring designs, created a huge secondary market for the toys and increased their popularity and value as a collectible."--wikip

...until it didn't.

There's that other variable at play here, called "demand."  The absence of it is what's tanking the price of your  BTCeanie BTCabies Bitcoin nao