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BTC Hashrate dropped another 27% down ~62% form peak now at 2019 levels (bitinfocharts.com)
93 points by noxer on June 28, 2021 | hide | past | favorite | 159 comments



This is basically really good news for bitcoin, since China will no longer source the majority of hashing power. It’s an opportunity to further decentralize hashing power across the globe, and for the west to take a stronger foothold.


It seems like bitcoin enthuasiasts can always determine why something is good for bitcoin. If more people hash the system is more robust but if less people hash then it's.. uh.. also good?


This is good for the planet because mountains of Xinjiang coal are no longer being burned to achieve literally nothing. Unfortunately these miners are probably going to be turned on somewhere else, attached to weaker energy grids - like Texas. Fingers crossed they're won't be but that's probably asking too much in 202x.

But yes of course, this is good for Bitcoin. Everything is good for Bitcoin.


> This is good for the planet because mountains of Xinjiang coal are no longer being burned to achieve literally nothing.

By the same token I could say all the power (and pollution!) used by the US military given that it's actively hostile to my country is a waste, bad for the planet and I wish it went away, but that wouldn't be too fair towards US citizens or their allies.

> But yes of course, this is good for Bitcoin. Everything is good for Bitcoin.

Well, Bitcoin is cleaner for now, wasn't that one of the greater criticisms levied towards it? I'm pretty sure by now that it could be found that mining Bitcoin cures cancer and AIDS by tomorrow and detractors would still find a reason to criticize it. I don't think there's a way to win, so I don't bother.


> By the same token I could say all the power (and pollution!) used by the US military given that it's actively hostile to my country is a waste, bad for the planet and I wish it went away, but that wouldn't be too fair towards US citizens or their allies.

You could make that claim, but of course, if the US military went away I suspect more than a few people would notice.

However, Bitcoin continued to work exactly as well without the extra hash rate. No byzantine generals were harmed in this hash draw-down. As such, when I say it made no difference, I mean it.

Mining exhibits an un-damped positive runaway condition with respect to price, as price goes up it becomes more economical to mine. As such you can waste more power and add unnecessary extra hash capacity and make more money. Not just can, have to, as others do so, to avoid getting left behind. Full on prisoner's dilemma. When 70% of it disappears en masse, it makes no difference.

> Well, Bitcoin is cleaner for now, wasn't that one of the greater criticisms levied towards it?

For sure, but it won't last, that's kind of my point.

The criticism is that it's roughly speaking the least efficient system humanity has ever implemented. Moving a mountain with a spoon is likely more thermally efficient. That hasn't changed, really, it's fundamental to the model.


> The criticism is that it's roughly speaking the least efficient system humanity has ever implemented.

Maybe, but setting bitcoin aside for a moment, the blockchain and the distributed trust is a revolutionary technology.

Imagine people complaining about how much cars pollute and how we should stick with horses. Are you willing to give up your car and everything that has an internal combustion engine?


The US Navy ensures the world's shipping lanes are free from piracy. Without this, our imports would be much more expensive. Someone with better math skills than me could verify this, but I imagine this endevor is net profitable.


cost of something != it’s environmental impact.

so you would have more expensive imports, maybe. and you would move to produce things locally. also, the cheap imports are cheap because there is a human price (ie basically slavery) paid at the origin. if you produced things ethically they would be more expensive rendering the navy useless as you would once again shift to producing locally.

also, since when does the us navy provide this service? i mean maybe it provides it, but i have a hard time believing it protects all the shipping lanes all the time (ie other nations surely protect their trading routes)


It's only the international lanes, and since the '50's iirc, but can't look that up atm.


If you own Bitcoin, you have a major incentive to spin everything as good for BTC so that they price rises. You are also incentivized to convince others to buy BTC so that the your investment in BTC pays off.

Given there is no intrinsic worth of BTC, rather just the collectively belief it is worth something, these incentives are very strong with BTC.


> Given there is no intrinsic worth of BTC, rather just the collectively belief it is worth something, these incentives are very strong with BTC.

Explain how this is any different from the US dollar? What is the intrinsic worth of USD?


The ability to buy something? BTC is not a currency at least in the US. With cash you can actually buy something. BTC is a collectable investment where the seller gets taxed on every transaction. And the only value to BTC is that there are sometimes, depending on the market, a Greater Fool out there to buy it from you. See Tulip Mania.https://en.m.wikipedia.org/wiki/Tulip_mania. Possibly BTC a way to store value between investments or during a currency crisis but the extreme volatility makes that extremely questionable. It seems it's mostly a gamble that a greater Fool will buy from you or, outside of investment/gambling a conduit for illicit transactions, though the publicly available tracking aspect of BTC puts that role in question also.


Assuming everything you said is true you still haven’t answered my question.

If Bitcoin has no intrinsic value, how is that different than fiat? What gives the USD or British pound intrinsic value?


The USD or practically all fiat currencies are an abstraction over barter. Obviously they are only worth as much as we all collectively believe, but that belief is anchored by what the currency primarily is used for, which normally is obtaining goods and services. That's not intrinsic but relatively stable, and central banks try to steer things in a stable way.

Meanwhile BTC currently only serves as an abstraction over fiat currencies. It's practically only exchanged from and to fiat currencies, and that's not stable, as popularity is then the only mechanism dictating the price. BTC is much more like gold this way than the dollar.


> Obviously they are only worth as much as we all collectively believe

I agree, which means both fiat currencies and Bitcoin have no intrinsic value, only what we collectively believe.

> BTC is more like gold this way than the dollar

agree


The value of the USD is that it's a currency that can be used to buy goods and services. The same is largely not the case for BTC.

To the extent that any goods and services are for sale with prices in BTC, they are (in my experience) priced consistently with trading out of BTC into some currency (say USD) and then purchasing the product with proceeds of the sale.


To be fair there are a lot more places in a 1000 miles radius around me taking bitcoin or crypto than there are taking dollars as payment.

The relevance of USD, and any currency, is a regional value.

And bitcoin is actually widely accepted here in Switzerland


The USD is equally worthless but at least people don't pretend that it is a store of value (some people want it to be one). You can't eat USD or BTC.

The primary difference is that people have to pay taxes and monthly payments on their debt. Every dollar created has to be returned one day. This ensures the continued existence of USD as a medium of exchange. Once something turns into a "store of value" it ceases to be a good medium of exchange.


> The USD is equally worthless but at least people don't pretend that it is a store of value (some people want it to be one). You can't eat USD or BTC

The ability to eat something is not what makes it a store of value. Milk is a TERRIBLE store of value for time frames greater than a few weeks, for instance. The USD is a store of value as it is relatively stable and so you know that you'll be able to leverage its value in the future; gold does the same. The beauty of USD is that unless you think the United States of America is going to cease to be, it is the only thing accepted for tax payments and so a few hundred million people along with countless businesses and institutions are going to need USD to pay the government every year. Literally every stable currency is a "store of value"; the predictability of the value is what makes it stable. This is precisely why BTC is not stable, nor a good store of value. It is an asset whose primarily uses are speculation and illicit financial flows.

> Once something turns into a "store of value" it ceases to be a good medium of exchange.

I fail to see the connection. Sure, not all stores of value are good mediums of exchange, but this has more to do with the physical properties of the underlying commodity rather than the fact that it holds its value stably. Gold is too heavy to carry around in your pocket, and securely storing a lot of it requires specific infrastructure that most people don't want to maintain. These things are true regardless of whether or not the value of gold is relatively stable over time.


It's a system that matches up quite well to the price of goods and services over time. Though it declines in purchasing power, it does so very gradually and predictably. It's the best money that's ever been created.


The ability to tax all residents and companies of the US?


Yes, the value of USD value is proportional to the power of the US government (and its judiciary/police/army)... The power to let the private sector flourish, mainly.

The value of Crypto comes from the decentralization (no need for trusted third parties), and is proportional to the hashing power of the network. Upstarts can easily be 51%ed by an incumbent with a large mining infrastructure of the same kind... But this holds as long as people with destructive power let them run.


AND US citizens and nationals no matter where they are in the world.


Plus the ability to take away their assets if they don't comply.


The US Dollar derives value from economic activity of the US. You can essentially say the US Dollar is a representation of US markets.


It's the word's reserve currency. You could pick literally any other fiat currency to compare against and make a marginally better case, but you picked the currency in which about 60% of the entire world's reserves are kept, which has value established by a large collection of national governments.


Notably the world’s reserve currency has lost literally 100x in purchasing power since 1933. That’s right, since moving off the gold standard the USD has lost 99% of its purchasing power relative to gold.

In 1933 $20USD would buy you 1oz of Gold. In 2021 it would take $2000USD to buy the same oz of gold.

It seems that the world’s reserve currency leaks approximately 99% of its value per century through the process of debasement which leads to inflation.

I would argue the world deserves a better store of value.


You are comparing currency (dollar) against assets (gold.). You are complaining that a currency is acting like a currency (inflationary) and not an asset (relatively resistant to inflation.)

I am so confused by this argument.

I think you are right though that Bitcoin isn't acting like a currency, it is acting like an asset. Although it is highly speculative, more so that gold, as evidenced by its wild swings.

Bitcoin is a crypto-asset, not a crypto-currency.


> You are complaining that a currency is acting like a currency (inflationary)

I challenge the assumption that a currency is naturally inflationary in nature. Though it is very tempting to politicians to print money and debase the currency if they can get away with it, there is no inherent law of currencies that makes them inflationary. In fact, throughout hostory the only way fiat currencies could be inflated was through debasement. Bitcoin has a fixed supply and cannot be debased but those properties do not make it less of a currency.


>> Explain how this is any different from the US dollar?

> explains how this is very different

>> Launches a completely unrelated complaint about inflation which seems to serve mostly to highlight that BTC compares poorly to gold; the original answer is unacknowledged


The USD is a reserve currency, not a reserve store of value.

It is held by other countries to pay their international debts, or to manipulate the exchange rate of their local currency.


> What is the intrinsic worth of USD?

Since dropping gold standard, I've always seen it as faith in the US economy. There's no similar entity backing BTC.


faith != intrinsic value.

all forms of money are worth something because people collectively agree that they are worth something and trade them for goods.

the USD is not special. BTC is not special.

People getting on their high horse about the USD and the faith in the US economy seem to forget that all things have a lifecycle and eventually everything goes away / is replaced. There is immense immediate pressure to keep the USD valuable and the thing that is used for international trade, but my guess is given 20-30 years a lot of things can happen.


That probably means that BTC will be priced more accurately than USD


It's a common joke ("this is good for bitcoin"). But in this case I would say it is actually good.

I would correct your statement: 1. Greater hash power makes the system more secure from attack 2. A large amount of hash power geographically concentrated is a weak point 3. More geographically dispersed hash power is better. 4. Ideally a large amount of globally dispersed hashpower provides the best security.

-- Disclosure: I do not currently own any BTC.


> 1. Greater hash power makes the system more secure from attack

Not necessarily. There's a lot of "latent" hashpower ready to join the fight if bitcoin gets under attack, including random people and orgs around the world and the current miners themselves aswell: a lot of them mine other cryptos aswell, and could diminish their mining intensity on them to devote hashpower to bitcoin wars or stop altogether.


The problem here is that the latent firepower can be used in two ways: to help defend the blockchain, or to destroy it. With 62% of hashrate offline, it's entirely possible to buy up the old miners cheaply, wait for complexity to fall, and then use your newly acquired hardware for fun and profit. Bear in mind that the attacks here could be 51% transaction-invalidation, or simply just messing with the complexity (jumping from 25 minutes/block to 3 minutes/block and back again as the system corrects for the changes in hashrate).


Bitcoin mining at this time requires ASIC devices that cannot switch to other algorithms, other coins that use the same, sure, but not for example Ethereum.


There may still exist some latent hashpower from people with obsolete mining chips. Those cost more in electricity to run than they mine, but when bitcoin is under attack, operating them could be a civic measure.


> when bitcoin is under attack, operating them could be a civic measure.

Unless I'm gravely mistaken about the bitcoin protocol, you wouldn't know that bitcoin is under a 51% attack until it completes.

The 51% attack succeeds when the attacker's blockchain becomes longer than the publicly-accepted blockchain. But there's no reason that the attacker needs to show their work publicly; they can start in secret, mine blocks, and reveal the entire chain at once after it is some number of blocks longer than the public chain.


lol. no.

there are 2 parts: one is mining the block, the other is propagating the block.

if you do what you describe, computing blocks would not be enough. you would also need to recompute blocks to account for what happened on the block chain since the split. the more time it passes, the more computing power you would need.

when people talk about 51% attack they usually talk about the double spend issue. this requires 1) a large number of nodes (>51% of the network) and 2) a large amount of hashing power. you would spend some bitcoin, let it be captured in the chain and after that you would fabricate a block that spends the coins differently. now you’ve spent it twice. the miners would pick this as the longer chain and keep going. the important thing to remember is that you cannot keep your chain in the shadows and that this type of attack would be a really hard to pull off (have you ever synchronized a lot of machines to do something? it’s incredibly hard)


If you look at it... Bitcoiners enthusiasm is the only thing good for Bitcoin.


I literally opened this so thread so I could see how long it takes for someone to say "This is good for bitcoin"

First comment


its a funny meme, but i think there is truth in it. bad news is often good because bitcoin only needs to continue to exist to prove itself. so if lots of bad things happen and bitcoin is still sticking around then it shows resilience and makes bitcoin more attractive.


Higher hash rate is good for security, less centralised mining is also good.

However a lower hash rate means less security, but if it is temporary reduction, whilst equipment moves elsewhere, this reducing reliance on mining in one nation, then the reduction in hash rate in the short term is not ideal, but has long term benefits for the network.


You're reinforcing his point


Yes, otherwise known as optimism ;)


Motivated thinking


How is this good news?

That the hash rate has fallen so much means that coordinating a 51% attack is perfectly doable. Imagine that the missing hashing power was mining a parallel blockchain right now. We know it's not happening, but this proves that it's much easier to do than expected. These news essentially mean that the claims about bitcoin being completely safe from state attacks are vaporware.


Bitcoin critics would mention the 51% attack vulnerability and point to the concentration of miners in China. Now that the Chinese mining concentration resolves, it is called bad news for Bitcoin because the hash rate will fall in the short run. But good and bad are on different time scales here.


A bit of news. A chinese citizen doing business else where could still be implored to help China when asked.


Hashpower was concentrated in China. It takes time for the miners to relocate and setup shop, I'd be surprised if the hash power is permanently reduced. I don't think anyone reasonable is claiming that BTC is completely safe against state attackers. That's the mission but nothing is 100% certain.


It’s always trivial to perform a 51% attack by forming a large mining pool. You don’t have to kick people out of China to do that. The only issue is convincing the miners to go against their economic interest.

China could have relatively easily done that previously but now it will probably be difficult for any one country to become that non-economic actor with both control of hash rate and the ability to coerce miners.


Funny factoid for you. Kazakhstan has now higher hash rate than USA, Mongolia also appeared on hash rate charts overnight.


The mining equipment hasn’t been scrapped. They’re shipping it to other countries with less regulation so they can get it up and running again.

Miners aren’t throwing in the towel. They’re relocating.


> and for the west

I find it so odd that many speak in phrases that suggest there is some global “west” vs. “east” whereas in reality it more so seems the case that there is more internal struggle within “the west” and “the east” respectively.

The Chinese in general seem to have a far higher opinion of, and feel less animosity to, say, the Danish, than they will the Japanese.


Isn't Japan part of "the West" in Chinese government's rhetoric?


That would not surprise me at all. The Dutch government also considers Japan to be “West”, but not South Korea, but it does Indonesia as a former Dutch colony, but not Suriname.

The terms “Western” and “Eastern” seem more than anything be based on race, not on actual cultural similarities. — Perhaps these existed a century back, but after the Chinese cultural revolution and the U.S.A. occupation of Japan, I do not believe Chinese culture to be closer to Japanese culture than Japanese culture to be U.S.A. culture.

If anything, the older division of communist vs. capitalist states made more sense. Though that difference too is shrinking with many officially communist states having incorporated a fair deal of free market, and many technically capitalist states having extensive government market direction into what is some call “social democracy”.


This is temporary until miners move their hardware elsewhere.


BTC proponents don't want to admit it, but performing a 51% attack has never been difficult: just form a large mining pool. The only issue is convincing all those miners to go against their economic interest.

China could have relatively easily done that previously but now it will be more difficult for any one country to become that non-economic actor with both control over hash rate and the ability to coerce miners.


> The only issue is convincing all those miners to go against their economic interest.

That's the problem, isn't it? Bitcoin "longs" are very unlikely to profit from a 51% attack, since its success would destroy the speculative value of the currency they hold.

On the other hand, increasing financialization of cryptocurrency allows people and institutions to build up short positions without directly holding bitcoin, and a 51% attack would cause those short positions to pay out. It may not even be illegal to do this, since there's no direct fraud in a 51% attack unless it's used to double-spend.

I wonder whether these two factors -- 51% resources and largest viable short positions -- still differ by an order of magnitude or two.


> That's the problem, isn't it? Bitcoin "longs" are very unlikely to profit from a 51% attack, since its success would destroy the speculative value of the currency they hold.

It’s not about the holders, though. It’s about what the miners decide is best for them. Currently, higher BTC means more profits, but what happens if/when there are proposals to change BTC in ways that make it more eco-friendly? This is where we’d see miners flexing their power over the blockchain.

It’s also not hard to imagine scenarios where the chain forks for whatever reason and the miners go to war trying to discredit or destroy the other fork.


Didn't this already happen with one of the largest mining companies Bitmain and the BTC vs BCH fork? They were largely unsuccessful but still control btc.com and the btc subreddit.


Miners are necessarily 'long' due to the capital investment in mining gear. Granted, this cost is less than the marginal electricity costs for mining, it is nevertheless significant.

The risk associated with colluding for a 51% attack, the risk of financializing such a huge short position, and the near certainty of your capital investment becoming worthless all mean that this isn't a compelling proposition.


Being short is by definition not holding any. If you hold some and go short, that’s just plain old selling.


Not quite. Being short is borrowing Crypto, selling into USD (or something else) and having an obligation to return the borrowed Crypto position at some point (agreed or not) in the future. Returning a borrowed position in a subsequently forked chain which is no longer economically valuable could be incredibly profitable.

It is of course entirely possible the collateral held by the counter-party securing the borrow is seized in such a scenario (legitimately or not).


Which is why a prospective attacker would probably seek to build its short position at the ordinary Wall Street level. Nobody will try to seize collateral for "winning" if you've sold Microstrategy shares short, for example, or even the BTCC Bitcoin ETF (trading on the Toronto stock exchange).

My gut feeling is that we aren't yet at the point that you could build an entirely on-exchange short position sufficient to fund a 51% attack, but that may change.

To estimate the cost of a 51% attack, miners currently get 6.25BTC/10 minutes at $35k/bitcoin, so the value of mining is about $32m/day. Rounding that up to even $50m/day to account for transaction fees, that's not very expensive if a hedge fund can build a $1bn short position.

The saving grace might be that you can't rent bitcoin mining hardware in unlimited quantities. A hedge fund might have to own the miners used for the attack, and if executing the attack causes bitcoin's value to drop to near-zero that would also devalue the mining hardware.


This is why you would build a mining pool or multiple pools They pay for themself and by the time the miners notice the abuse its too late.

You could probably create a pool that grows rather fast if you simply pay more than others this would be possible by not generating any profit form the pool or worst case you could pay on top.

far more likely is a scenario where an existing pool owner or a few collude and pull this off as "exist scam". A crypto winter where the price of BTC drops below the mining cost would be the perfect situation. low hash rate. price of BTC down so not many people shorting and mining hardware cheap form all the miners who went bankrupt. Once a miner/pool has 51% it would eventually make financial sense to kill BTC for a final huge profit rather than slowly going bankrupt as well.


Perhaps the only reason a hedge fund hasn't tried this yet is the unclear legal status of doing so. One law blog (https://restislaw.com/liability-51-attacks-cfaa/) argues that a 51% attack would violate the Computer Fraud and Abuse Act, but that blog does not take into account the recent Supreme Court decision limiting its application.

It might also be considered market manipulation to take out a short position on a bitcoin-linked fund or company (like Microstrategy) and then take actions with the intention of changing the price of Bitcoin. That could add enough legal risk to make a hedge fund think twice. I doubt a hedge fund could build a sufficient short position on unregulated DeFi networks, either, especially since blowing up Bitcoin would likely break the peg on at least Tether.

Still, this would seem to leave Bitcoin in an uncomfortable spot: the only reason the "free from government" currency continues to exist may be regulations by those selfsame governments.


Far more likely this would be done by "criminals" and they dont care about the law especially the law on the other side of the globe.


The whole GME affair is this constant reminder that “convincing to go against their economic interest” is always on the table.


> The only issue is convincing all those miners to go against their economic interest.

Well, you gave the reason yourself why this is not that "easy" ...

Interestingly, it's the same reason why large cartels of several companies, ultimately, are doomed to fail to control the price of their product: In a cartel each member is incentivized to undermine the cartel's price to gain a profit. So usually cartels are effective only for a short time (and, yes, even the oil "cartel").


> The only issue is convincing all those miners to go against their economic interest.

this is almost verbatim from bitcoin whitepaper. more news a 11?


The participants in a mining pool gravitate towards the largest pool because the. Their mining reward is more predictable. That benefit is the only reason to go with a larger pool. That pro is quickly outweighed if the large mining pool turns out to be a bad actor and attempts a 51% attack or other hash rate related attack. That is to say. Miners are self interested in avoiding 51% attacks. Pools can’t coerce their miners to do anything because switching pools is so damn easy. Likewise, governments can’t just coerce pools to coerce miners to do anything anti-Bitcoin. The incentive structure that is PoW works, still works, and this is it working before our eyes.


...for some definitions of "difficult" and "large mining pool"


> The only issue is convincing all those miners to go against their economic interest.

The minute someone comes up with a 51% attack that actually is in the financial interests of the miners, this becomes easy.

This is likely why it will be so difficult to ever move Bitcoin to a more economically friendly system: The miners will see any attempts coming and use their power to manipulate the system in the direction that benefits continued mining instead of more eco-friendly forks.

Bitcoin mining is a cash cow for a relatively small number of big players who have heavily invested in mining gear. They have no interest in letting this golden goose slip away.


Its easy. Offer a 0% fee pool. They will all flock to it.


Until said Pool gets close to 51%. This has actually happened before many years ago. Look up the Ghash fiasco from 2014.


Okay so run two 0% fee pools. Don't disclose the owner.


That is not how Bitcoin works. You would need over 51% of mining power to make this switch.

What you are proposing is a zero-fee fork of Bitcoin.


Excellent. I'm happy that this is happening.

I hope this will continue steadily downwards.

This is very good for the Earth.


and for AI industry as well, hoping the RTX cards will get affordable someday...


Bitcoin mining does not use graphics cards. Currently, they're too slow to make this process profitable. It's ASICs that do all the Bitcoin mining.


The price of other crypto is essentially pegged to the stability and value of Bitcoin either directly or indirectly.


Isnt that majority of miners use custom made chip these days?


If that were the case, prices of graphics cards wouldn't have dropped by half after the crackdown:

https://www.pcgamer.com/chinese-market-gpu-prices-drop-amid-...


GP is correct for Bitcoin. The crackdown on mining seem to applies to all cryptocurrencies though, just based on power usage, so GPU based operations will be affected as well.


Does this mean that profitability of mining will go up? I found a calculator, but don't understand it well enough. Did find a "Bitcoin Mining Difficulty" which I assume will change? Value now is: "19,932,791,027,263.00" https://www.coinwarz.com/mining/bitcoin/calculator


In theory yes but it takes while before difficulty adjusts and since the price also doped it likely doesn't matter much.

Its more of a problem security wise. There is now guaranteed hardware out there that can produce more than 50% of the hash power but its currently not "working" for bitcoin. This in theory could mean someone is secretly mining a longer chain which could later be made public and "reverse" the other chain.

This is very very unlikely to be the case because the "missing hashpower" is likely being moved to other locations and that is the reason why it is not running.


Yes. In 4 days the difficulty will adjust and it will be 20+% easier to mine a coin. As more people start back mining difficulty will adjust again


People aren't stopping their mining because the price fell, they are stopping their mining because of regulatory pressure from China. Miners that are still running today just get to rake in the benefits of China pulling out of the game.

The profits will last until new datacenters are set up outside of China. It's a slow process to do that, hashrate might not return to its peak value for 6+ months.


correct. When I mentioned more folks mining again I meant more folks mining because it’s easier and of course whenever the dislocated Chinese miners get their operations back up again in another location.


Sort of. All things being equal, lower difficulty means more profitable. But the difficulty is updated every 2 weeks (1440 blocks) to try and stay at 10 mins between blocks, so any profitability bump will only last for up to 4 weeks (the first retarget may not be fully enough if the hashrate drop occurs in the middle)


I think you've got that backwards. Profitability doesn't go up until the difficulty adjusts. Once the difficulty adjusts, it's cheaper to mine each Bitcoin and everyone who still has a rig running will make more money.

The increased profits will continue until everyone who was displaced from China can find a new home, but this isn't going to be a quick process, Bitcoin requires enough datacenter space that all the Bitcoin-ready datacenters outside of China are already full!


The profitable mining equipment isn’t being scrapped. It’s being packed up and moved.

Miners have no interest in simply giving up on profitable mining gear.


Yes, for those still mining, this is great!


I assume this is to do with the Chinese crackdown on Bitcoin miners?

Could someone with a better knowledge of cryptocurrency than me explain what a substantial drop in hashrate means or could mean? Thanks!



At these levels, not much. Bitcoin’s security is still rock solid and pulling off an attack is still incredibly expensive. For those who are still mining, ie. the rest of the world, mining will be more profitable until the Chinese hashing power migrates to a different country.


Yes still seems very solid. The was one guy in the early 2010 days on Bitcoin talk using 1000 instances(pc back then), or claiming to do so,and did not succeed. The difficulty is now still many millions times more than it was back then.


The Chinese based miners are offline and moving to other more favorable countries.

A good perspective video from CTO Larsson https://youtu.be/88V4JZr_x64


UK just banned Binance too.


Not Binance the exchange, but the sub-company that offers advanced financial instruments.


Hey maybe I might be able to finally get a dang graphics card for my (formerly) new computer after failing to secure one for over 9 months now :-)


Not that coin :) (Etherum is on GPUs but bitcoin on ASICs mostly)


Ethereum hashrate dropped by 20% in last month, too.


so what happens to the unused ASICs?


Being shipped elsewhere. At least two Chinese miners have shipped a bunch to Kazakhstan.


Landfill


Trash or being sold to other miners. Most likely trash, though.


Not just graphic cards. I had to wait 3 month to source an AMD CPU. Aren’t they manufactured in the same fabs than GPUs? And still waiting for the ps5 to go back in stock!


The real change will happen when Ethereum moves to PoS and overnight turns off PoW mining. It is estimated to happen by end of this year or Q1 2022.


It was estimated to happen in Q1 2019, too. It looks more promising this time but I wouldn’t put much faith in Ethereum timelines.


Q1 2019, there was no Beacon chain running. They're pretty much live already but only running the skeleton chain to make sure such a sensitive system is given time to test and work out the kinks.

Given that the beacon chain has been running since December 2020 and people have locked in billions of $ worth of ETH, highly unlikely the switch will get delayed by long time now.


There are visuals gone viral of some of the minings farms being shut down and packaged up for shipping:

https://imgur.com/a/ditki4Z

https://twitter.com/DocumentingBTC/status/140626608363237376...

The next Bitcoin difficulty adjustment will be happening soon and estimates indicate a change in 22-27% change. https://btc.com/stats/diff


That first image is a strong incentive to not get involved in mining!


If China really wanted to mess with bitcoin, they should not only ban mining but confiscate the hardware. Then everyone will be left speculating over whether the government is going to do an attack.


Though I haven't seen any evidence, it wouldn't surprise me of Chinese government already directly owns or controls quite a bit of mining. Not a bad way to manipulate markets.


I'm a big crypto hater, but honestly this seems like a nothingburger. Difficulty will go down, other mining pools will expand, some of these machines will get shipped to other nations. Unless they all literally got confiscated by the CCP and immediately set to work on a hostile attack on bitcoin this isn't going to lead to a 50% attack. After 6 months mining will probably be about back to where it was.

The only way this would be really bad would be if it led to forced liquidation on the open market somehow. As long as China is happy if they move their machines and bitcoin and maybe their persons out of the country then I don't see how this changes much. Even if they start arresting people that doesn't directly lead to bitcoin being dumped. Now if the CCP confiscated many billions of $USD in bitcoin and then dumped them on the open market all at once just to nuke crypto because they were sick of it, that'd do it.


You know what that means? Somebody is going to get 50% of total hash rate and cause untold mayhem and catastrophic loss of trust in Bitcoin.


To do that you'd need to spend a significant amount of money on mining hardware, and then use it to make your investment lose its value. That would be a very odd strategy. What would the goal be?


I can imagine that the USA government would do anything to protect the dollar. I wonder how much money the mining hardware would cost in order to perform a successful 51% attack.

Would it be less than a carrier? Less than a submarine? More than an F-35?


Ok, so I will answer my self. I found this link with the estimated costs for several cryptocurrencies:

https://braiins.com/blog/how-much-would-it-cost-to-51-attack...

It is given in dollars per hour. Compared to the cost of flying a F-35, a 51% attack would be like flying 20 F35s at the same time. Nothing too expensive for the military budget. It is just a squadron.

EDIT: The updated cost is here: https://www.crypto51.app/ With the new hashrate, that would be only 16 F-35s


The only thing that can protect the dollar is a healthy domestic economy and Biden is doing his best to make that happen.


Discover breakthrough in ASIC design strategy. Produce enough mining rigs for the attack but don't bring them online. Buy massive shorts on bitcoin futures. Bring all your rigs online at once, 51% attack, confidence and price plummet, make huge profit on the shorts, use profit to buy highly discounted bitcoins, things settle down, market recovers, sell your next-gen mining rigs to all the other miners, use your huge profits to fund R&D into the next breakthrough, wash, rinse, repeat.


Such a large attack would likely be the end of BTC so the strategy better would bet on it not coming back

a better stagey would be to sell the hardware but make sure most of the units sold operate in a pool you control you can have multiple pools to make it not obvious. then attack with the pools so the lose in hardware value is not yours.


...maybe you have a large short position in Bitcoin futures...


Let’s hope so. It’s a house of cards by nature.


Spelling, please!

...another 27%, down ~62% from peak, now...


What’s happening?


The protocol is configured to aim for 10 minute block intervals. If in a 2 week period there too many or too little blocks the difficulty to find a new block is adjusted for the next 2 weeks.

This drop is caused by miners moving from China to other countries.


Governments finally decided to crack down on Bitcoin. Governments are slow so people had time to get super happy initially and now are waking up to reality.


Or that governments just don't want you to use your computer to solve certain equations.

Either way it is good for BTC as China will no longer be able to pull 51% attack.


> China will no longer be able to pull 51% attack

Any major government, the PRC included, has it well within its power to repurpose existing computing hardware to launch a 51% attack on Bitcoin. They don’t, because why would they. What has changed is a small group of private individuals in China can no longer coördinate such an attack.


Governments would have to source the specialised chips used to solve the Bitcoin hash function. While that's possible, it's not as easy as repurposing existing computing hardware.


> would have to source the specialised chips used to solve the Bitcoin hash function

Specialised hardware is more efficient. It is not necessary. A combination of owned computing and purchased general-purpose cloud resources would do the trick, albeit sloppily and a bit more expensively than it would have been with specialist hardware.


One ASIC is the equivalent of 1000 GPUs, and 1 GPU is equivalent to 1000 CPUs. So whilst what you say is possible, it is not likely. Even if the CCCP required every CPU in China to mine bitcoin it would not come close to the required 51%.

Even if we factored in half the country having a GPU to add to the effort it would not be enough. If they wanted to do it they would have confiscated the mining equipment rather than have people send it abroad. Even manufacturing enough ASICs to mount a 51% attack would be difficult for a nation state to achieve. China's best bet was confiscating existing equipment and they pretty much prevented that by forcing it out of their country.


You’re thinking at the scale of individuals, not nation states. Tens of billions of dollars will buy the necessary computing.


There is a huge chip shortage right now so yes it could be bought but it would be inefficient and take a long time. Seizing the existing miners in China would be a simple task for the authorities there but they didn't do it. They are not going to spend tems of billions to attack bitcoin when they could have done it for the cost of the power alone.


> They are not going to spend tems of billions to attack bitcoin when they could have done it for the cost of the power alone

Because they don't want to. Because it's in nobody's interest to blow up Bitcoin. It's a money maker, a tax maker, and nobody has gotten too badly hurt yet.

I was responding to the assertion that China now can't disable Bitcoin. That's not true.


Those ASICs don't evaporate when shut down. China could now seize them and actually pull off a 51% attack.


They are not seizing them, they are being shipped abroad to nations where they can be used to mine bitcoin.


Any idea which countries they will be going to?

It would be great if for example Iceland which can produce surplus base-load renewable power without significant impact to its population.


Kazakhstan has been mentioned due to proximity I believe and also Texas, there has been a lot of interest in using the natural gas flares from oil wells to run them as this is currently a waste product.


Kazakhstan has 1% tax rate for "datacentre services" and extremely subsidised electricity on top of 90% of it coming from co-generation plants.

Not for long https://kursiv.kz/en/news/rynki/2021-05/kazakhstan-plans-can...


In my limited understanding those flares are necessary to preserve the safety of workers and equipment on site. If they were able to provide useful power, they would already be doing so.


You can put the miners in a portable data centre and place them on site, what you can't do is transport the natural gas any significant distance to use it for power generation.

'If the mountain will not come to Muhammad, then Muhammad must go to the mountain'

https://www.reuters.com/business/sustainable-business/oil-dr...

https://oilmanmagazine.com/how-and-why-natural-gas-flaring-i...


Funny how the BTC maxis suddenly accept the fact that China could do an 51% attack, now that this is about to change. But in the years and years since China hosted over 50% it was always denied by the same people who know point out why this is good.

You know whats even better. FBA (Federated Byzantine Agreement) instead of PoW/PoS. And nodes all over the globe not just where electricity is cheap.


Pricier energy?


So nice, I hope it drops to 0.


This means BTC is useless and now really has no use. Must sell all your holdings and forget about crypto :(


Was BTC ever actually useful? The closest to usefulness it ever came was in the beginning as a playground for early crypto enthusiasts.

Afterwards, it was just a hype and speculation object.

It was never suitable for transaction processing or value storage.


To me it was/is an interesting experiment but one of the key components of bitcoin the finite resources is also its mayor point of failure (to gain acceptance).

The nice thing of money in its current form is its relative stability. I can go out and buy or sell something without having to think about the value of the currency. This is not possible with bitcoin because the more it will be used its value will get higher due to the fact there are only so much bitcoins. So if it represents more value the value of the coin must go up

To make it usable for trading (shopping or otherwise) it must hold a relative stable value. But if it is stable it is no longer of interest for speculation. This will mean that speculators will move their money out of bitcoin and thus it will reduce value. rinse and repeat.

Bitcoin it self doesn't give interest or pays a diffident so the only way of making money is to ensure someone wan't to pay more for it than you did. It doesn't have any practical usability. You can't make a neckless from it, you can't use it in electronics. of course no currency gives you interest of diffident but due do the fact that that in a stable country the currency is stable it is an attractive intermediate. of course people make money with trading currency but that is done based on global economics and the state of the region or country that is responsible for the currency.

The reason why it is good to be able to print money is that if output rises and thus more value is created you can keep the value of the currency more or less the same.

The idea of having a none government run currency to make sure it is not manipulated is focusing on the symptoms and not focusing on the issue. the symptom is misuse of power the issue is not enough accountability of government (and thus banks etc).


Yes please do, brings the price down for us others :)


That's what I was hoping for ...


Bitcoin mining is a poisson process [1] so you have to look at significant moving averages to estimate rate changes. So far looks like hashrate went from ~140E to ~90E, a 35% drop from peak.

[1] https://en.wikipedia.org/wiki/Poisson_point_process


Your link only describes what is a poisson point process, but nothing about why bitcoin mining can be modeled as such a process.

Have people analyzed the bitcoin mining data and how they fluctuate compared to different random processes?


bitcoin mining is poisson process by definition: mining difficulty is automatically adjusted such that new blocks appear at regular intervals.

do you have any specific objection as to why bitcoin shouldn't be modeled in this way?


The original Satoshi paper uses the Poisson distribution as an approximation to model the bitcoin mining process.

The more appropriate model might be negative binomial, because you want to know how many successes you get until a specified number of failures occur.

I don't doubt the Poisson distribution would model the data fairly well, but it's really hard to say that a real process is Poisson distributed by definition.




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