[Lilug] Bitcoin

Rocco Laudadio testing1567 at gmail.com
Sun Jan 27 08:34:48 PST 2019


Mining profitability is not too much of a concern. It tends to be a self
adjusting metric because the act of turning off your miner makes mining
more profitable for everyone else.  Also, Bitcoin miming has been
primaramly in China for several years now since they have government
subsidized electricity costs. The mining industry will always follow the
cheepest electricity costs. You can see a few charts here:
https://bitcoinwisdom.com/bitcoin/difficulty

As long as two factors remain true, fluctuations in mining shouldn't effect
the functionality of the currency.  As long as the function of the currency
is unefected, I don't see why it would have any effect on the price.

First, the avarage block time needs to stay somewhat near 600 seconds.
Every 2016 blocks the difficulty readjust to make 600 seconds the avarage.
So as long as it doesn't drop so rapidly that it gets stuck between
difficulty adjustments, it should be fine. An example of an event like this
would be if 50% or more of the miners turn off in a very fast time period.
Imagine if half the miners turned off immediately after a block difficulty
adjustment. That would mean that the currency would have 50% reduced
capacity and transaction speed untill another 2016 blocks are mined. Due to
the reduced speed, this milestone would take 4 weeks to reach, after which,
normal speeds and capacity would resume.  Now let's pretend the same number
of miners go offline, but this time over the course of a month. In this
scenario the transition to a lower difficulty will be much smoother with
only minor slowdown and capacity limitation.  A more gradual shutdown is
more likely then a large percentage shutting down on the same day since
there is a large variance in the profitability from one miner to another.

The second metric that could effect the price is harder to measure because
it's a bit more abstract. That is the theoretical cost of funding a 50%
attack on the network. To pull off an attack like this, an attacker or
group of highly coordinated attackers working twords a single unified goal
would need to purchase enough mining capacity to be more powerful than the
rest of the current network combined.  They would also need to pay the
electricity costs to sustain the attack for several blocks. Currently we
are protected from an attack of this nature because the shear size of the
mining network makes this an absurdly expensive attack which in the end
only provides you with a 50% chance of successfully scamming someone by
rewriting transactions. As cheeper used miners hit the market and the
difficulty rate drops, there is a theoretical point at which this attack
becomes profitable. I feal that we are still way off from this point in
Bitcoin, although it has happened before with smaller less mined
cryptocurrencies.

On Sun, Jan 27, 2019, 7:37 AM Robert Wilkens <robwilkens at hotmail.com wrote:

> I know some people on this mailing list are interested in crypto according
> to matt..
>
> Wanted to share.
>
> Bitcoin no longer worth the mining cost, JPMorgan says
> https://www.cbsnews.com/news/bitcoin-worth-less-than-it-costs-to-mine-jpmorgan/
>
> _______________________________________________
> Lilug mailing list
> Lilug at lists.lilug.org
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>
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