Just a heads up for those of you who are in it for a quick buck and for those using online tools to figure out profits:
I’ve been thinking about getting a small miner for my place, but I keep getting discouraged by all these "mining profitability" calculators.
Let’s not forget we mine not just for the short-term profits, but also to help safeguard against a 51% attack that could crash the price of Bitcoin.
The mining scene is getting more centralized, which is pretty worrying. Check out this site that shows how, back in 2012, there were 1000 different miners that managed to produce 1000 blocks in a row. Now? We've got just 16 miners handling that. That’s a serious red flag.
I’ve been thinking about how much mining power should be in the hands of each BTC holder to make sure everyone plays their part in keeping the network safe.
Sure, I can’t match the THs of someone wealthy, but if we could all have a share based on how much Bitcoin we hold, it would be more balanced.
Here’s what I worked out:
According to the data, the current hashrate sits at 800 M, and the hash rate in TH/s tends to rise linearly with BTC price in USD.
So, how much TH/s should each person pitch in to secure their fair share of the network?
With 21 million BTC available, if you own 0.1 BTC (which is about 10,000 USD right now), your slice of the total is 0.1 / 21 M = 4.76e-9. Given the current hashrate of 800M TH/s, you should be contributing about 4.76e-9 * 800M TH/s = 3.8 TH/s.
As far as I know, that’s the most energy-efficient way to think about it.
I didn't know that aside the profit making side of mining, it is also functions to discourage Bitcoin from crash. This has brought a small confusion in my mind.
There are 21 million Bitcoins created. Some have been mined, some are in the wallets of some people and some missing. What will happen when all the Bitcoin gets mined? Will the price crash or will the network crash? This is in the context of the OP.
well is btc headed towards the end?
some think so.
some do not.
2012 we dropped to 25 coins a block 50.000% of coins mined
2016. we dropped to 12.5 coins a block 75.000% of coins mined
2020 we dropped to 6.25 coins a block 87.500% of coins mined
2024 we dropped to 3.125 coins a block 93.750% of coins mined
2028 we will drop to 1.5625 coins a block 96.8750% of coins mined
2032 we will drop to 0.78125 coins a block 98.4375% of coins mined
2036 we will drop to 0.390625 coins a block 99.21875% of coins mined
we will know what's up by 2036 I think.
Your numbers are off buddy, sorry. You consider the percentage of bitcoin holdings a person should spend for mining, but you completely overlook that not everyone has access to the same costs of electricity.
You should absolutely not mine if it's not profitable, unless you're curious to learn how mining works. It is the design such that once a source of cheap electricity is found, it can be used to reduce profitability of other miners. Such is bitcoin. Altruism makes shitcoins.
If you read the article more carefully, he actually imply there are 16 mining pools (who mine at least a block) in 1000 blocks in 2022.
Let's not forget that hashrate (usually) increase over time and we see more efficient ASIC chip every few years. So if someone were to follow your idea, they need to buy ASIC every few years just to keep up.
This analogy would work better if you talk about securing Bitcoin wallet by buying hardware wallet or device only for managing Bitcoin.
For most miner, mining is business. I don't think they would bother do more than moving from pool with high hashrate percentage to low ones.
At this point, why would anyone try to do a 51% attack? It would require billions of dollars to get access to miners, which would give someone 51% of the network's mining hash rate. If someone invests billions of dollars into mining rigs, equipment, data centres and personnel, then why would someone attack and destroy a currency with a 2 Trillion dollars market cap? There are lots of billionaires with their own interests in the Bitcoin business, so I don't think anyone will let anyone to do 51% attack.
I agree with that. If we start mining Bitcoin, it will increase the mining difficulty and many miners will be forced to shut down their miners. Then only rich mining companies will be able to keep their miners on during unprofitability and this will be a huge threat of 51% attack to my mind.
Ok, I'll bite.
What exactly happens in a 51% attack?
I understand that miners have some kind of voting rights, but I don't understand exactly how they work, or what they vote on.
I been hearing of consolidation in the mining network for a while now. Instinctively it seems bad, but I don't fully understand the perceived risks to it
An attacker is able to reverse any transaction, given enough time, or deem the network non-operational by mining empty blocks, if he owns the majority of the hashrate that is used for mining, hence "51% attack".
Read more in here: https://learnmeabitcoin.com/technical/blockchain/51-attack/.
I own some btc so I want a secure system (network) for my money. Who provides greater network security, your own full node or your small miner.
I run BTC full node and run 50THs miners, conencted on small pool (kano and ck).
the full node is more important than 50th on the btc network.
in theory we have 850,000,000 th mining worldwide so so 850,000,000/50 =17,000,000 so 17 million to one your hash not much.
I think we have under 1,000,000 full nodes so well under 1 million to one maybe 100,000 to one in the case of your node.
so 22,000 to 1 vs 17,000,000 to 1
if you want the hash to be at the same number you need way more.
850,000,000/1000= 850,000 to 1. far less than 22,000 to 1
850,000,000/40000 = 21,250
So you need 40 ph for same ratio
if you are not finding blocks and successfully chaining them to the blockchain your hashrate does nothing for Bitcoin, all those usb stick miners thinking they are protecting bitcoin -- they are not.
But by all means, if you want to gamble for a solo block, go ahead, but don't burn money mining at a loss thinking you are helping Bitcoin, you are only helping the miner maker and the electricity provider.
I think @BlackHatCoiner is correct on a whole. Mining should be profitable, because if it's not, then the cost to attack the network would very likely drop or at least the hashrate could become unstable.
But I can relate a bit to the OP. Bitcoin's miners aren't only there to produce hashes and prevent 51% attacks. They also have a power position related to the protocol development, for example to approve softforks.
It is better if this power is more distributed. There are some scenarios where entities like governments, Central banks (when they buy enough Bitcoins as "strategic reserve"), ETF/ETP companies and other actors could buy mining power and launch marketing campaigns to push Bitcoin's development in a certain direction. The higher the participation of the "crowd", the better the protection against such "soft attacks".
On the other hand, a few altruists with a small miner would probably not really help. It would need a massive network of "near-altruist miners" to really change something in Bitcoin's power equilibrium. I think this is currently not realistic and thus I tend to the conclusion that the incentive model of "mining as profitable business" offers currently the best protection.
Correct if we have only a few altruists. A massive altruist mining wave could indeed help to protect Bitcoin, because eventually some of them would find a block and they are less prone to corruption than big mining companies so their power, even if only 10% of the hashrate, would be more "valuable" in some sense. The only difference to commercial mining farms is their ROI equation is lower than 1 or close to 1, instead of being really "profitable".
how massive do you imagine it to be? the average usb miner is well below 1th but lets say its 1th, the current hashrate is 800,000,000th, we need 80m usb sticks to have a 10% which again is useless if its all what we have.
The kind of massive i imagine would be when most people start using btc then tech advances to the level of ( here is a light bulb that consumes a few extra cents and mines btc) or (stick this chip to your washer and let it hash everytime you wash your clothes) that kind of billions of chips massive not a very expensive usb stick.
To be honest, I'm not afraid of the network getting hacked but there was a time when I really thought about it as a potential threat but now I think that it doesn't make sense. First of all, why would someone do that? What would they gain? If someone attacks the network, we will know it before because at first they have to reach 45, 46... 49, 50% hashrate, right? So, if we know it, the price of Bitcoin might fall down. Attacker will have to invest lots of money, resources and workforce to collect 51% hashrate and why would anyone do that when there is nothing to gain on the table and even if they gain, it will be reversed very easily? In the end, they gain nothing but lose billions of dollars and reputation. 51% attack is like committing a suicide.
I don't get your point, since OP talks about hashrate. If you also include nodes which doesn't accept incoming connection, current total nodes is about 94 thousand according to https://luke.dashjr.org/programs/bitcoin/files/charts/software.html.
The profitability of Bitcoin mining plays a crucial role in preventing attacks. If mining Bitcoin is no longer profitable, it becomes easier for attacks to occur.
Theres little incentive to mine Bitcoin if its not profitable. Even if your goal is simply to learn how Bitcoin mining works, its reasonable to expect that it will take you at least a week to get a grasp of it, after which you should discontinue your efforts.
In the past, I was concerned about potential attacks, but those days are over. The hash rates are now distributed across various countries and locations, including China, the U.S., Nigeria, and others. It's too late to worry about that now.
Plugging in an outdated ASIC miner won't help Bitcoin if mining isn't profitable. If its not generating profit, it doesnt contribute positively to the network.
I think bitcoin mining has to make money to keep things safe since us miners are the ones checking transactions and stopping bad stuff. If it's not worth it anymore, I worry fewer people like me will stick around and that could make the network shaky. But I love how bitcoin's spread out all over the world, it makes it tougher for anyone to mess with it. Even my old mining gear might not rake in cash but I figure it still helps keep things decentralized if I use it smart. Over time, I've seen bitcoin figure itself out as we all adjust to how the market swings.