

MtRed Bitcoin mining pool will be shutting down - morphics
https://bitcointalk.org/index.php?topic=15929.msg1793833#msg1793833

======
GigabyteCoin
More and more small pools are closing their doors due to the influx of ASICs.

It's sad to see, and a big worry for the future security of the blockchain.

~~~
brador
What is ASICs? Google is giving me tennis shoes.

~~~
codesuela
It's basically a computer with specialized hardware whose sole purpose is to
mine Bitcoins, see <http://www.butterflylabs.com/> for an example

------
ghshephard
Would anyone like to translate this? I'm reasonably familiar with bitcoin
mechanics, but I couldn't understand what had occurred based on this post.

~~~
makomk
Normally, Bitcoin mining has fairly high variance - you only get paid when you
find a block, and because blocks are relatively rare and found at random
intervals your income varies a lot too. MtRed were what's known as a PPS pool,
which meant they basically ate the variance and paid miners based on the
amount of mining work they did.

The trouble is that running a PPS pool requires a huge buffer of your own
funds to cover payouts during periods of bad luck, and if the buffer isn't big
enough the pool will inevitably go bankrupt. It appears this has now happened
to MtRed and it sounds like they only have enough funds to pay out half the
money they already owe miners. (Technically, over a long enough period of time
PPS pools will go bankrupt with 100% certainty no matter how big the pool
buffer.)

~~~
tantalor
Would adding a fee allow them to continue?

What if they only paid out when a block was found?

~~~
ketralnis
> What if they only paid out when a block was found?

Then the miners would have no impetus to help them and would instead mine for
themselves

~~~
palebluedot
I'm not sure this is true. For example, consider the following scenario at
$200 USD per bitcoin: 5 people pooled mining capabilities, and mined a single
bitcoin. They could then split that, and effectively pocket $40/ea (or 0.20
bitcoins each). If you mine solo, is it possible to mine a partial bitcoin,
rather than increments of a whole bitcoin?

~~~
jes5199
Right: mining produces whole bitcoins, and does it infrequently. That's why
pools exist; people weren't willing to wait months to randomly win the bitcoin
lottery. (Maybe that's a design flaw!) Most pools pay proportions of their
actual winnings, not their predicted ones.

------
brador
Question: At current electricity prices, what is the total cost of mining the
complete 21 million bitcoins set?

~~~
mikeash
The difficulty of mining is dynamically adjusted based on the currently
available mining capacity so that bitcoins are produced at a constant rate
over time no matter what.

In other words, you could mine the full set of bitcoins for virtually no
electricity whatsoever if you could convince the world to abandon bitcoin
mining completely, then just let a single old, slow, cheap miner run in the
corner for the next 100+ years. Or you could use as much electricity as you
wanted on the project by throwing more and more computational resources at it.

~~~
mkr-hn
So if someone set off a series of EMPs across the planet leaving only a
handful of computers functional, the difficulty would adjust downward to
account for it?

~~~
TrevorJ
Or convince everyone that it isn't profitable for the amount of electricity
involved.

~~~
jes5199
Sometimes electricity is essentially free. My home is heated by electricity (I
live in California) - any watts that I spend mining bitcoins produces the same
amount of heat as my electric heater, but has the advantageous side-effect of
maybe making money.

(I don't actually do this because I don't have a desktop computer, and it's
unclear if building one at this point will pay for itself before custom
integrated circuits push the bitcoin difficulty so high that GPUs become
worthless)

~~~
shpxnvz
Does your home have a heat pump? If so, your house heat pump is 3 to 4 times
more efficient than the waste heat produced by your computer, and you are
using 3 to 4 times more electricity compared to the same heat output from a
heat pump.

~~~
brador
Wait, Energy in = energy out. So what is the extra output that makes the
computer so much less efficient? is it noise?

~~~
mikeash
As the name implies, a heat pump _moves_ heat around. When you heat your house
with a heat pump, you're not (just) converting electricity into heat. The
electricity is being used to move heat from outside your house into the house.
You make the interior of the house warmer while making the exterior (very
slightly) colder. It's exactly the same as an air conditioner or refrigerator,
just pointed the other way.

Of course, energy has to be expended to move heat around, and there are
inefficiencies. But with real-world equipment and common cold-but-not-too-cold
temperatures, a single unit of electricity can be used to move several times
as much heat as it would produce if you just converted it to heat directly.

A computer is as efficient as anything when it comes to converting electricity
to heat. Heat pumps win because they're ultimately playing a different game.

------
mtred
Hey, This is RR, To anyone curious, I will be on #mtred@freenode this evening
answering questions.

------
eddywebs
bitcoin pool shutting down are there any implications in terms of network
hashrate or the overall exchange rate ?

~~~
gibybo
On top of the already mentioned fact of indivudal miners switching easily,
MtRed was also a comparitively small pool so it had little impact on the
network as a whole.

