Topic: What would happen if bitcoin drops so low mining isn't worth it (Read 3074 times)

But you could have oscillations in hash rate, much like alternate chains (e.g., Namecoin).  75% of hashing power fires up, mines 2 weeks worth of coins in 3 days, hash rate quadruples.  75% shut down for six weeks.  Mine for 3 days, shut down for a six weeks.   This would be a steady state where mining power quadruples and quarters, alternating.

End result: everyone but the patsies/free power guys mining at artificially inflated difficulty get their coins at a quarter of the price (but 75% get half the possible coins and it takes everyone much longer overall).  Still, it's downward pressure on price as a double whammy of a reduced utility and security of the network (~24 minute confirms 93% of the time) as well as cheaper to produce coins.   

It could turn into a feedback loop where mining 7% of the time for a 75% lower cost is the only way to be profitable for the majority.  Heck, were that to happen now you could even get CPU miners and Nvidia guys joining the fun during profitable periods.  "Unprofitable", artificial difficulty would keep creeping up until even the free power guys are looking at a higher cost to mine vs buy in equipment failure/depreciation and decide to drop out during the bad times.  That would require around 99% of the mining power to flee, so I don't think it's possible.

If everyone stops mining I will run a CPU miner at work and get all of the mined Bitcoins.


But then...not everyone would have stopped mining since I would be mining.


So basically, mining will never stop.

I think we do in some cases especially if the price hangs around to the point they can't cover the cost of electricity.  I say this because they might go offline for a bit and then if enough did this we could have large fluctuations in hashing.

I do admit though with the network being so large I think it won't happen unless the price drops substantally.

true, I'd not thought of it that way.... its still a concern though that a lot of people have taken on too much overhead in the scale of their operations which could result in them scaling back due to lower bitcoin value.  My magic value is 30GBP which is how much I'm happy throwing at bitcoin in terms of electricity profit or none.

I don't think people who invested so much into bitcoins will just leave. I think they believe in future, and in fact are probably building more cost-effecient and reliable mining infrastructure.

In other threads I've said bitcoin needs casual miners.  A casual miner is someone who runs the mhash/s that they can afford to profit or not, simply because its a little fun and their contribution.  I run 820mhash/s, thats what I can afford to come what may.... what hacks me off is all these peeps who throw up 30 ghash rigs and its obvious that when things get rough they will not be able to maintain it... thus big chunks of the networks hash rate could just fall away.

Miner in a lot of country can still mine for profit even at 5$ so they sustain the total hashrate and some hardcore miner will probably mine even if is in red (and a couple of week of no earnings or small loss is sustainable for almost every one), but if in long term BTC still mantain a low price that's not feasible. Anyway BTC is again over 7$ (over the +10% I've put as premise to invalid my theory) and next difficulty will drop of 2%

Correct. I meant to say hashrate. Difficulty has been stabilizing lately as well.

If your theory were true there would already be a big drop. The reason there isn't is that it's still profitable for some people to mine. When they see that others are dropping off they can expand their own mining operation because they don't need to fear a large difficulty increase.

Shutting my mining rig down tonight for the first time in over 4 months.  Last time I didn't bother, the visit to 6s was temporary.  This time looks like we'll flatline in the 7s (at best) before the next stairstep down.

Even at 4.6 cents/kwhr it's not worth the wear on the hardware.

Bring on the cost effective FPGA miners!

Bitcoin mining was quite a lot cheaper during the early adopter period, though - cheap enough that most miners could afford to do it just for the fun of it.

So is expected an increase in difficulty...that's not good at all: I hear a lot of miners that will stop mining or mantain it at low level due to price drop even now, an increase in difficulty can stop even more people to mine (low MHash/sec miner in first place are not incetivate to continue mining: a 200MHash/s machine can produce less than 2BTC/month today, another increase can reduce of another 1-2% the reward). Or the BTC/$ grow at least of 10-15% in a couple of week I can easily predict a big drop in next difficulty rearrangement.

We've already been there.  We refer to it as the "early adopter" period.

Mining will always be "worth" it. It might not be proffitable for the current miners, but there will always be people willing to mine, even at an operational loss:

* believers in the system. If you dedicate a few hours a day to make Bitcoin succeed, you can pay a few dollars to keep a machine running all the time.

* businesses who are involved in the Bitcoin economy. If transactions stop, they can't do business, so they will keep e few GHs mining, and if mining at a loss, they will recover that from their proffits.

* people who don't pay for electricity/hardware and/or whose costs are already covered. I have a few servers in datacenters. Tha hardware and monthly costs are already paid for from the other operations, so it doesn't cost me anything to leave a miner running. Even if I only make 1 USD a month, that's proffit. Also, next time I buy a server, I might even get a system that will take two mining-worth GPUs.

You can see the difficulty history here:
http://btcserv.net/bitcoin/history/

I stopped mining a week or 2 ago.  At around $8 it just isn't work running my electric bill to 500-600 a month and deal w\ the added noise and heat in the house.

I imagine alot of others have done the same despite network hash rate rising recently.

Mmmmm, speculation is sooo speculationy. 

that's not difficulty, that's hashrate. www.bitcoindifficulty.com

it went down twice but I thought it went back up slightly this last week here back to the 1777777 (or whatever) it's at now?

Bigger: http://bitcoin.sipa.be/speed-lin.png
More: http://bitcoin.sipa.be/

It's not in freefall, but I expect a gradual decline that will last several quarters or more.  I don't expect the trend to change until the exchange rate rises, which I think will take a while (as discussed in other threads).  In any case, we've had two difficulty decreases in a row.