If you’re wrong, you lose your stable-coins.
Let us know how it goes :)
As the other poster mentioned though, many miners won't be using oil-based energy sources, so it does make one wonder about cause and effect. Maybe a dip in BTC would've done it regardless of oil?
They can't calculate correct price of mining because it's more complex and enerrgy costs are different in so many regions and inside the electiric producers etc. !
GP probably didn't mean that hardware though, but rather the facility, electricity supply, cooling, etc.
Yes, it does but lacks depth, the problem here is they are diversifying not pivoting and by virtue of game theory for each miner they stand to win on others exit, as the mining difficulty goes down, but this is creating a loss-loss situation.
Which in normal times, are something taken for granted, but once it does happen, the edge case collapse the entire system.
edit: the earlier language is not exact, the scenario is an exponential drop of value that results in exponential drop in miner willing to mine until this discrepancy can be resolved. i.e. the system is not protected against extreme volatility (e.g. -99% over a block cycle)
The problem with BTC going down is that it's a double whammy of not only BTC going down but also the cost of its shovels going up
Before: BTC pays $100k but a shovel costs $300
Now: BTC pays $70k but a shovel costs $$??
Bitcoin asked the right questions but came back with the wrong answers
Especially since the "sell shovels during a gold rush" has been used to apply to nVidia
What does this mean, sorry?
> the edge case collapse the entire system.
If you mean that if it reaches a certain point, the entire system will collapse, it means you don't understand the difficulty adjustment. If it's too expensive to mine, then some miners leave, which makes blocktimes be longer, but not to worry because the consequence of that it just that difficulty will go down, which means that you need less hashrate to mine (and maybe some of those miners that leave will come back because it is profitable again for them). This means that it is essentially impossible for all miners to leave at the same time; some of them stay even if at a loss, and some of them are just hobbyists that can already feed their miners with solar power (so there's really no loss for them in leaving them connected).
In practice it’s not much of an issue because bitcoin is not use for commerce but it’s a store of value and it some of the trades are not even on chain.
Which is when exactly, and how likely is that to happen? It hasn't happened yet in ~14 years, but I guess "never say never". There is a lot of money saying it won't happen very soon though.
(Obviously the equipment doesn't go away. You can start it again. But if you can't make a buck doing something, you won't do it.)
I probably should look this up in wikipedia first.
> Miners who successfully create a new block with a valid nonce can collect transaction fees from the included transactions and a fixed reward in bitcoins. To claim this reward, a special transaction called a coinbase is included in the block, with the miner as the payee. All bitcoins in existence have been created through this type of transaction. This reward is halved every 210,000 blocks until ₿21 million have been issued in total, which is expected to occur around the year 2140. Afterward, miners will only earn from transaction fees.
https://en.wikipedia.org/wiki/Bitcoin (emphasis mine)
Block reward stays constant, amount of work required (on average) to get a block reward is dynamic in order to make it so that total number of rewards given out over a length of time stays roughly constant.
So if too many block rewards are claimed in a given time frame, difficulty is increased to slow things down. If not enough are claimed then difficulty decreases to make it easier to get one.
Competing for it is more of a game that has a cost to participate in.
Bitcoin's supply won't increase as costs go down, unlike other assets.
Um. That's a causative relationship, even if it's mediated, but it's still causative. And generally, the relationship is even more direct: the suppliers are quite reluctant to sell at the price lower than their costs unless they expect the prices go up soon enough™, so the lower boundaries for the prices exist.
Let's call this cycle A and cycle B.
If A is too hard, miners drop out, cycle B gets easier, miners flood back, cycle A gets harder.
This results in the hard cycle getting longer and the easy cycle getting shorter.
This isn't completely critical as there is I believe a small damping effect, so it isn't completely lethal to bitcoin, but a key thing about bitcoin mining is that whether other people are mining or not doesn't actually affect your own profitiability.
Other people dropping out doesn't actually mean you get more bitcoins per hour/watt, it only affects the next difficulty adjustment as a secondary effect.
Based on bitcoin cryptobros, you need a certain amount of independent miners for the 'quality' of bitcoins. A bitcoin miner if its a state, can operate with a loss a lot longer if not even infinit, than the decentralized normal people (who do not exist anyway).
It also creates a lot of pressure on miners if you do not run your gpus, yuou are also at a loss, which can break the mining for everyone if too many in parallel go offline, than go olnine again because difficulty droped to much.
And if it becomes to volatile, no one wants to risk it anymore
Prices are dropping so fast it seems like the cheapest way to power mining rigs.
Also free grid electricity for three hours a day in Australia will be interesting.
The funny thing about bitcoin is that the rate of bitcoin discovery doesn’t change when they shut off their rigs so it won’t change supply. It would actually make more sense to sell all their bitcoin, flood the market with coins to do the price, wait for large miners to collapse and then restart mining at hopefully lower prices.
There are usually some fixed costs involved and you need cash flow. Without cash flow, your business can shut down pretty damn fast. With cash flow, your business can stay around longer, maybe long enough for the economics to shift.
This sort of thing happens with oil. There are oil producers which sell at a loss. There was even a brief moment when the price of an oil barrel went negative, which meant that if you gave somebody a barrel of oil, you had to pay them for the privilege of taking that oil off your hands. Oil producers did not all shut down when that happened.
I am a little doubtful of the $19k figure anyway.
> It would actually make more sense to sell all their bitcoin, flood the market with coins to do the price, wait for large miners to collapse and then restart mining at hopefully lower prices.
This kind of market manipulation is not so straightforward.
More accurate: The price for an _option_ to buy/sell oil was negative, not the price of the barrell itself.
helsinkiandrew•1h ago
Surely they should stop producing until its profitable again, or am I missing something?
ceejayoz•1h ago
They may be hoping it goes back up.
Snoozus•1h ago
derangedHorse•1h ago
illiac786•1h ago
OJFord•1h ago
arter45•45m ago
singpolyma3•30m ago
nytesky•24m ago
delusional•1h ago
acidphreak2k•1h ago
Thankfully, it all worked out in the end very well. I don't know how anyone would put in the effort/money to get a major crypto farm going and plan to just cash out every month to pay bills. What's the point? I always thought of it as a long-term bet on the price going way up, which it did.
VladVladikoff•1h ago
embedding-shape•1h ago
Compared to doing some work to getting 1 BTC per month, which you can then individually decide what to do with, instead of a lump sum you could cash out at any moment.
OJFord•58m ago
acidphreak2k•56m ago
csomar•1h ago
pessimizer•47m ago
If bitcoin miners are smart enough to have anticipated this, and decided not to hold onto bitcoin and just let it drop; and also to have repurposed their equipment, sold it to bigger fools, or have just run it into the ground, none of these ideas make any sense.
Why would they, though? The real answer is that governments and monopolists are propping up bitcoin through simply handing tax money to bitcoin holders, and in the case of the latter (also government tit-suckers) leveraging themselves to pump up bitcoin markets when they are down. I'm sick of humoring this because it was once mildly interesting technically. It's a criminal scheme and everyone involved needs to go to prison. When I hear a politician say the word bitcoin, I'm going to do everything in my power to damage that politician.