The amount of waste of Bitcoin Mining is incredible.
It is all about virtual digital mining, which is to race to find the first hash, that has X number of zeros in the front of it.
And this burns an incredible amount of electricity. And all for what? Just to show proof of work.
Can't there be a more useful usage of cryptocurrency mining to show proof of work?
Something that is more relevant to humanity. Like protein folding? Or planet hunting? Or pattern analysis? Or something else, that can be used to build an AI brain?
It is impossible to create a "useful" PoW. The issue comes down to incentives. As bitcoin is a decentralized, trust-less system, there needs to be constant and powerful incentives to prevent miners from cheating (by creating forks, or executing any number of other attacks).
The current main incentive against cheating is that miners will lose their invested PoW (compute time + electricity) if they cheat and get their block thrown out. However, with a useful PoW, this calculus changes. Now, the PoW is no longer "wasted" when the miner cheats and gets caught as the PoW is now useful for something besides mining. This means that attacks are much cheaper and much more likely to happen.
One interesting part about this is that you can consider PoW usefulness on a sliding scale. The more useful the PoW, the more vulnerable your coin is to attack. Thus, you can probably get away with a "useful" PoW if it isn't actually very useful. This is one of the reasons why most "useful" PoW schemes focus on something which is pretty much useless (such as finding weird primes and whatnot).
> The current main incentive against cheating is that miners will lose their invested PoW (compute time + electricity) if they cheat and get their block thrown out. However, with a useful PoW, this calculus changes. Now, the PoW is no longer "wasted" when the miner cheats and gets caught as the PoW is now useful for something besides mining.
So you spend $x on (compute time + electricity) to mine a useful PoW worth $y outside the blockchain and an additional mining reward of $z. If you cheat, you don't get to collect the $z reward. Although your original $x are not completely wasted, you still only have $y instead of the $y + $z you could have had.
$y + $z must be greater than $x. If $y is money and $z is scientific contributions... $y is most likely not something people are offering money for. So in an open market its value is at or near $0. So $z by itself must exceed $x.
To not care about the $z, $y must exceed $x by itself and that seems really unlikely for the types of things that OP suggested instead of proof-of-work.
If $y is the useful PoW, would that not make $y the scientific reward while $z is the (monetary) token reward by way of mining?
Edit: silly question on my part. y and z should be trivially interchangeable. Your argument appears to rest on the idea that the monetizeable scientific worth of the work would dominate the worth of the crypto token itself, since there would be limited value in an already-mined result beyond standard blockchain speculation - is that the case?
In that case, you'd want everybody running profitless basic research scientific computations for other people's research teams.
Eventually we may be able to buy cloud compute by inventing a new coin with a proof of work useful only to us, buying some Etherium to back it with (so that there's some initial value to mining it), and then letting speculators put it in there currency baskets to give it long-term value.
That's true, but nobody would be able to bet on it being useful specifically to them. (I'm thinking about simulating LHC stuff, searching astronomical data, the sorts of things where at the time of computation nobody has a clue who will end up benefiting. Protein folding might be off-limits depending on who wants to know how it folds, and why.)
One could structure it such that a single PoW is useless, yet multiple aren't? Like pieces of a puzzle that only make sense once you collect many of them.
A few years ago I read a comment on HK which addressed that very point. The argument said that if PoW was useful, the security could be compromised unpredictably.
It goes something like this: Imagine that you are mining Bitcoin and protein folding for a drug. Let's also imagine that if your mining rig finds the protein, it's worth $15m (as a company could commercialise a new drug with that information).
You can imagine a point where you can make more money from the results than from the mining (if they are useful, they will be worth some money after all). But the security of the Bitcoin network lies precisely in the game-theoretical aspect that it's more profitable to mine than it is to cheat. But if you can mine and make some money on the side (because it's useful), then cheating [double spending] might become more interesting. Or perhaps your "side-business" can bootstrap a 51% attack.
Finding a useful & relevant computational problem, whose monetary value is predictably low far into future and whose computation scales with a simple function ... well, it's a really difficult question. So the safest option is to go for "brainless" computation. That is trying random numbers.
I think it is not useless. It does the job: "Keeping the network secure by calculating random hashes". Useless, of course, is very subjective. I wish most video games did something useful like protein folding (I consider them and the machines powering them a waste of energy, matter, mining, time and intellectual power).
On the topic of video games being useless, the computers that run top of the line games also end up being almost exactly what you need to run most scientific computing projects. So what a non-negligible amount of gamers do is when they are not playing run programs like BOINC. EVGA has a program that actually incentives this.
https://forums.evga.com/m/tt.aspx?f=79&p=1
If only video game creators did something like... while your noob character wears this free special hat, he gets +1 XP and your machine folds proteins in the background
People keep saying this. But are have you also thought about how wasteful is Facebook or Instagram or Youtube are? Do you know how much electricity Facebook burns running computers to serve fake images and shitty news? Or Youtube serving Logan Paul videos?
If we really care about the environment we wouldn't be playing this game of trying to say one kind of environment destroying energy consumption is okay but another isn't. We would instead argue to directly solve the root problem, which is dirty energy polluting our environment, by making sure energy pricing covers that cost. That way the market can tell us if Logan Paul videos are more valuable to people than say Bitcoin, and we would actually do something to fix the environment rather than simply making it cheaper for one energy consumer (Youtube) to pollute at the expense of outlawing another (Bitcoin).
Setting aside the tu quoque argument, there's a fundamental difference between Youtube/Facebook and Bitcoin:
For Facebook/Instagram/Youtube, the incentive is to lower the power use. Google pays directly for the power used by their servers which host Youtube, so lowering their power usage immediately benefits Google. They also have indirect incentives to lower the power consumption on the client for their video/audio codecs.
For Bitcoin, however, the incentive is to use as much power as possible. If a more efficient miner is manufactured, the incentive is to use more miners. The only ceiling to the amount of power used by Bitcoin miners is when the price paid for the power gets above the expected average block reward.
> People keep saying this. But are have you also thought about how wasteful is Facebook or Instagram or Youtube are?
It’s like saying that actors are wasting food and energy by doing what they do. Facebook YouTube and others are here for our entertainment, meanwhile bitcoin right now is mostly used by people with a final goal of selling it and making money. Most of the miners I know don’t ever use it to purchase something or send money to someone. That’s the problem in my opinion
See here you've gone straight into making a value judgement that you don't believe Bitcoin is useful, therefore we should permit Logan Paul videos but we shouldn't permit Bitcoin. But other people are happy to spend their money to buy electricity to burn it to mine Bitcoin. Just as you're okay with people spending money to watch ads and download videos. And without installing monitoring in everyone's home to make sure they don't decide to mine bitcoin on their laptops, or contravine whatever other new things we want to outlaw, then we can never shut it down so it's all moot. And if it's all moot then perpetuating this pointless "bitcoin burning electricity bad, youtube burning electricity okay" fad that is going on for some reason is a waste and a distraction from real problems and real solutions. The solution is to make sure whoever is burning electricity doing anything is paying the true cost of that electricity. Because there is literally nothing else you can do here if you really care about the environment.
True, they're all about 50% renewable this year, aiming to be 100% at some time.
I'm a bit skeptical of this argument though. If we go down this path we have to answer what percentage of bitcoin mining is from renewable sources too. As I understood it (correct me if I'm wrong) a very large amount of Bitcoin mining is located around hydro sources to get cheap hydro electricity. That would mean the same argument that Youtube is green would apply equally to Bitcoin. But then I suspect someone would say something like "well they're using power from a hydro dam in china but look at all of China's coal plants, now other chinese people have to buy from those coal plants" to which we'd probably have to then say "yeah, kind of like when Microsoft buys Columbia river power cuz it's cheap and green or Facebook buys solar and wind power because its green that means that someone else in America can't buy that green power and is "using" power from one of our coal plants too". It's all one grid at the end of the day.
>And this burns an incredible amount of electricity. And all for what? Just to show proof of work.
No. PoW is just an old name from the 199x spam fighting. The point here is planet-scale consensus, not "proof of work". One way to achieve distributed consensus in untrusted non-static environment is to randomly choose master for a given block. Imagine that everybody just throws a dice, and whoever gets 6 becomes that master. How we make sure that there is only one master for a given block, and that when you say 6 you really got 6 as i have no way of checking whether you even threw the dice at all? Satoshi's great insight was in building such a verifiable and statistically [for several minutes] single-master dice by using the good old hash based PoW.
Now, if somebody could come up with more energy efficient way to achieve that consensus at such a scale...
> Now, if somebody could come up with more energy efficient way to achieve that consensus at such a scale...
A handful of the top cryptos are using some variant of proof-of-stake (like dPoS, dBFT, etc.), all of which are energy efficient. Ethereum is currently experimenting with PoS in Casper.
PoS basically increases energy efficiency by decreasing the degree of randomness and skewing the dice in favor of stakeholders to the degree depending on their stakes (at the limit you'd have just one entity verifying all the transactions, a very energy efficient situation we have today with fiat). In general PoS looks like a reasonable trade-off, and we're to see whether it gets accepted.
A little known fact is that validating a block with 1 Bitcoin transaction or all the world 10 minute transactions in Bitcoin would spend roughly the same energy.
The energy is spent on security independent of transaction volume.
> Something that is more relevant to humanity. Like protein folding? Or planet hunting? Or pattern analysis? Or something else, that can be used to build an AI brain?
It's not that easy. You need to be able to generate tasks that have a predictable levels of difficulty.
I think that as the value of bitcoin decreases, a lot of the mining will stop for want of profitability. Right now it's still Klondyke days and everybody is out there with his pickaxe. In a few months, slightly used pickaxes, or in this case GPUs, will be cheap and plentiful.
It's stupid while it lasts bit fortunately it won't. Bitcoin has no practical utility, neither as currency nor as a store of value, and you can't pick the blockchain apart to extract anything of value. Bitcoin is like my dad's books of completed sudokus: Proof of hard work but not of any value to anyone.
ATM Bitcoin is approaching the $10K mark from above. The press will soon be writing stories about people who lost this-and-this-much. The stupid money which fueled the bubble will dry up.
I've done all sorts of "mining" since 2010, bitcoin, ethereum ( eth really ), monero, etc... and I've come to the same conclusion as you ( as far as proof-of-work being wasted electricity/time/and effort ), recently I've switched to "mergefolding", folding@home and curecoin, see: https://curecoin.net/dev-blog/merge-folding-rewards-fldc-and... it makes me feel good that there's some possibility my proof-of-work could actually help someone someday.
The answer is yes, since Satoshi's paper back in 2008 a whole subset of CS research has propped up just on consensus algorithms. Other alternatives are simply to switch to a PoS style of consensus, which without a doubt has it's own set of tradeoffs. Currently Ethereum is planning to switch to PoW/PoS system where the amount of computation on the PoW is drastically reduced from the current level of difficulty i.e. There essentially having a PoW/PoS model where the PoW is just like HashCash it's purpose isn't to do consensus but stop "spam".
> The answer is yes, since Satoshi's paper back in 2008 a whole subset of CS research has propped up just on consensus algorithms.
That's been an active field of CS research for decades (it was an active field mentioned, though not explored in depth, in an introductory-level class I took in 1990), and (from Google Scholar) seems to have been hugely active starting about 4-5 years before Satoshi’s paper.
But I think the relevant point is that there has been progress since Satoshi, not that the progress is due to or solely in response to Satoshi.
How many resources are being "wasted" to protect world's wealth? From buildings to vaults to security teams to computer systems? If I had to guess I would say considerably more than what bitcoin wastes.
Gold and diamonds both have industrial applications. They have intrinsic properties outside of their scarcity that also give them worth (for gold, their corrosion resistance, for diamonds their hardness). Even if they had no aesthetic value they would still be mined and sold, because they have practical uses. Is the same true of Bitcoin? Right now, I don't think so.
Bitmain, the largest Bitcoin miner on the planet, is now buying a whopping 20,000 16nm wafers a month from TSMC! That's double as much as in the previous quarter and a higher volume than what NVIDIA orders from TSMC.
I don't think it's possible to be energy efficient in a proof-of-work blockchain? Whatever energy saving you come up with will be negated by having to match competing miners' increasing throughput. If you are not running on 100% you are losing out?
You're thinking from the perspective of the miners.
From the perspective of the hardware manufacturers that's an advantage. If you're making the hardware and you come up with a 10% energy savings, everyone must now replace their old hardware or be left in the dust. Hardware manufacturers will make a killing. The prisoner's dilemma you are thinking of only applies to the miners, it's a benefit for the parties selling them the hardware.
Does the efficiencies discovered not get distributed to the rest of the economy? My point was that it could lead to developments in energy use beneficial in separate domains.
The difficulty rises with the total hashrate across all miners, not on the individual hashrate/efficiency of any particular miner - if you can eke out a temporary efficiency advantage over everybody else, you can profit nicely while they're trying to catch up.
Eventually. But newer hardware will tend to be the most efficient component of the hashrate and push out older hardware by generating more hashes per unit of electricity (hence the CPU->GPU->ASIC progression).
Bitcoin network bandwidth remains the same, and energy usage has continued to increase in a race to the bottom in terms of work and waste for bitcoin mining - this is by design of how Satoshi's difficulty algorithm reduces efficiency with increase in hash rates.
There are projects like gridcoin, uscore dot net, that use mining to compute scientific research. It is considering using a Proof Of Research approach.
It would be game changing if blockchain mining efforts could be applied like this to other uses as well, like someone needing huge datasets analyzed and formatted into a presentable state on an ad-hoc basis, sort of like AWS Athena.
Just found out about Filecoin which is an interesting concept, you "mine" by storing and serving files people save to the network.
Stuff like this is a much more interesting use of cryptocurrency and blockchain technology in my opinion, instead of burning electricity for PoW you can do meaningful work while collecting a reward.
There would definitely be a first mover advantage. On the other hand, for most other VLSI applications, improved energy usage is a PERMANENT advantage: If e.g. Apple improves energy efficiency of Annn chips, it enables them to build better devices, even if the rest of the industry catches up.
For Bitcoin, my understanding is that this is not the case, because any cost improvement in the industry will attract more miners until difficulty adjusts to the previous equilibrium where (cost of mining a bitcoin) = (value of a bitcoin)-(some risk premium)
It's first mover advantage in the same way surviving is a first mover advantage. You're fine if you're profitable, but with constant improvements that won't be the case for long, unless you too start moving to new technology.
I suppose could estimate if I knew the number of GPUs sold but I've only seen estimates of that. As far as I know nVidia doesn't give their shipment numbers.
Keep in mind, though, that the constraints for Bitcoin mining are a lot different. The Bitmain chips are far smaller than the NVIDIA ones to increase yield, so the absolute chip counts will be higher but NVIDIA is probably still ahead in terms of area shipped (latency is totally unimportant so no reason to have gigantic chips).
Pretty sure quantum tunneling starts to come into play under ~6 nm (hard limit of usual consumer processor)
Do these do anything different to be able to aim for 7nm so fast ?
My wife and I were just talking about Bitcoin and I had this wild theory. This is obviously BS, but I had fun exploring this idea. Here it goes:
What if Bitcoin/blockchain is a actually a strong AI? The AI manipulated humans via lucrative mining to spend ever increasing amount of electricity and other resources on running it. It's distributed and hence cannot be shut down easily.
If there was an application taking up so much power and we didn't know what it did, it would be pretty suspicious. So instead of trying to be secret, the AI went public and promised wealth, no-regulations, etc. to humans to do its bidding.
How else would you do it if you were a strong AI?
Maybe the things we know about blockchain is just the surface level. What if all the hashes that are generated are part of code+data that runs and trains this AI?
And hey, we don't know who Satoshi Nakamoto is and if that person is even human.
Disclaimer: I don't have any background in encryption, crypto currency, blockchain, have no stake in any *coin, etc. But I do love science fiction.
The end of George Dyson's classic article on Google goes:
For 30 years I have been wondering, what indication of its
existence might we expect from a true AI? Certainly not
any explicit revelation, which might spark a movement to
pull the plug. Anomalous accumulation or creation of
wealth might be a sign, or an unquenchable thirst for raw
information, storage space, and processing cycles, or a
concerted attempt to secure an uninterrupted, autonomous
power supply. But the real sign, I suspect, would be a
circle of cheerful, contented, intellectually and
physically well-nourished people surrounding the AI. There
wouldn't be any need for True Believers, or the
downloading of human brains or anything sinister like
that: just a gradual, gentle, pervasive and mutually
beneficial contact between us and a growing something
else. This remains a non-testable hypothesis, for now. The
best description comes from science fiction writer Simon
Ings:
When our machines overtook us, too complex and efficient
for us to control, they did it so fast and so smoothly and
so usefully, only a fool or a prophet would have dared
complain."
I love it! For all the bad things bitcoin has brought, I have to say it makes me feel like I'm living in a cyberpunk novel! Snow Crash...Neuromancer.... I think people are focusing on all the negatives and overlooking all the fascinating aspects of whats going on. The internet has basically spontaneously created an interesting and suspicious technology. I think it's really only been possible thanks to the increasingly effective and available means of energy production, such that almost a consumer commodity.
Neal Stephenson, if you're reading this, this would make an amazing sci-fi novel.
On top of that, Etherium mining is eating the graphics board market. The price of NVidia's higher end boards has doubled in the last six months.[1] Etherium was supposed to require a general purpose CPU to mine, but now it's done on GPUs with large RAM.
I've bought a 1070 last year for machine learning and used it for a few days.
Now I don't know what to do: sell it since Volta will be a game-changer for ML anyway, but what if when I will want to do ML again it will be impossible to buy any card?
ETH is going PoS soon enough, the other altcoins drive GPU mining significantly as well. Particularly the CryptoNight coins (Monero, Electroneum, etc) for the AMD market, and Equihash coins (Zcash, primarily) for Nvidia cards.
As a cryptocurrency-confused individual, I read articles like this and wonder how I'm supposed to assign any meaning to the "value" being created here, and by blockchain PoW in general.
So this company is buying a bunch of wafers... He's converting the value of the wafers into value on blockchain, I guess?
Because I can't help but interpret these things as "some people are wasting a lot of electricity, and you should pay them for it!" But, I'm open to a better explanation.
Perhaps it might help to consider it equivalent to one converting the value of picks and buckets into value in gold. Just as the picks and buckets are worth what they’re worth, the gold is worth what someone else is willing to pay.
Anything can have "value" if someone is willing to pay for it. The US dollar is just a piece of paper if nobody is willing to exchange anything for it. Cryptocurrency has value because some speculator is willing to pay for it because they think it'll be worth more in the future.
Exchange value is most often price, but it is in reality the vector of the equivalent amount of goods and services you will receive for a unit of some good or service.
The point of money is that it collapses all exchange values to two vectors, one for selling to money, one for buying with money.
The downside of money is that it hides many very obvious relationships. In a topical case, that the cost of video cards has essentially stayed constant when expressed as etherium units.
tl;dr: money lets you calculate prices as n, exchange values needs n^2.
Why are banknotes worth anything? They are just pieces of paper with some ink on them, after all. They are "worth" something, because people are willing to do work or trade you stuff for them. The same with mining bitcoin - instead of printing banknotes, you make a "thing" that you can then trade for services and objects, because people want to have that "thing"(this part is crucial). Most importantly, people are willing to trade that "thing" for real actual dollars, and hence the mining craze.
The reason banknotes are worth anything is because you need them to pay taxes and fees to your/a sovereign.
They literally entitle you to pay the corresponding amount of taxes and/or fees (e.g. for market transactions) to the sovereign, which you cannot pay otherwise.
Hence why they are not mere pieces of paper with ink anymore a stock share or bond is: they're titles - the value is in what they entitle you to, not the physical substract they're on.
Bitcoin doesn't entitle you to anything other than creating a new ledger entry in the distributed ledger book that is the blockchain. Except unlike most ledger books, the Bitcoin blockchain does not record transfers of actual property between parties - it records the transfer of abstract numbers (which cannot be property in and of themselves).
Do you see people printing banknotes out of feathers or some other randomly expensive material? No, and similarly mining bitcoin is some randomly expensive process. The process of securing a "coin" can be done very cheaply with minimal computing cost and the world will shift to that.
The issue is not that the process has to be expensive. You are correct - we could generate billions of crypto coins within couple hours and beat bitcoin right away. But people want bitcoin. The same why people are willing to pay the price for a labour-intensive painting that took years to make over an identical reproduction that took 5 minutes to print.
Until 1971 dollars were worth something because they could be converted into one of the thousands of tons of gold bars the US stores at Fort Knox (and elsewhere).
Then a magic wand was waved over the printing presses at the US Treasury and they began to attain value for no reason. This magic has now spread to Bitcoin, Ethereum, and even cryptocoins like Dogecoin, whose creator has stated that the coin was created as a joke.
If the dollar never needed gold convertibility, why did they ever have convertibility in the first place? Why does the government spend a lot of money to store thousands of tons of unneeded gold at Fort Knox etc.?
There is a magic to the dollar - because if a panic ever causes its power to wane too much, Trump only has to utter six magical words to let it regain its power - "the convertibility window is open again".
How many thousands of tons of gold, governments, armies etc. stand behind Bitcoin?
Convertibility has always been based on a fundamental misunderstanding of money, and always fails because it's a flawed concept (and requires fixed exchange rates, which is always a bad idea).
Money has always been based more on representing debt than actually having intrinsic value (that misunderstanding comes from the barter myth, that pre-money economies had markets that used barder, which there is little anthropological evidence for - see Debt: The First 5000 Years for a pretty good overview).
As for now, the US dollar has a baseline demand because all business and income in the US requires taxes to be paid to the Government in US dollars, and all spending by the Government happens in dollars. The rest of the domestic economy emerges out of that, just as market economies always have. The value of the dollar is effectively ultimately 'backed' by the goods and services produced by the US economy. Herein lies the problem with convertibility - why would we expect that the amount of gold the Fed corresponds to the size of the economy? It won't, so the value will always diverge and hence how the system failed (more than once).
> "some people are wasting a lot of electricity, and you should pay them for it!"
Hard question to answer. Is it a waste? Compared to having one centralised miner plodding along at zero difficulty, yes. But it depends what new tech/ideas comes out of all this blockchain stuff. Are particle accelerators a waste?
Note that Bitmain is mostly a hardware vendor, although they do mine using their own equipment. Most of these chips will be sold to other miners, not used by Bitmain themselves.
I was wondering about this, why do they sell them instead of mining them? They could sell the older model once the new chips they designed are ready no?
The cynical answer is that customers are willing to pay more than the hardware will ever mine over its lifetime.
The non-cynical answer is that setting up gigawatts of data centers is not trivial and not Bitmain's core competency. Also, selling the hardware upfront locks in the profit even if the price of Bitcoin later crashes.
Because they can get more money faster by selling the mining units. Mining is not a guaranteed return but selling a unit is. Plus large scale mining requires a large capital risk (electricity), that is compounded with the large capital investment into the hardware.
Plus if they have significant BTC reserves (I believe they do) then selling mining equipment strengthens the BTC network and improves the value, maybe, of their current holdings.
This is even more interesting than I thought at first glance: by selling hardware to other miners (for conventional money, I suppose, as that's what they need to pay upstream suppliers like TSMC) they can fund large mining power bills without having to sell their cryptotokens to do so, which would depress the market, which would threaten their whole business. BTC will crash whenever the influx of money into the network is lower than the outflux to power suppliers. Miners can't "hodl" everything when they have power bills to pay. Selling chips to mining investors is a form of inviting new money into the network.
Diversification of assets is a real thing at that scale. They don't sell everything, but a balanced approach from conservative (selling mining equipment) to aggressive (mining as much BTC as possible.... and some other political stuff I won't get into) is how Bitmain runs their business. It's smart. You want to balance your ranges.
They're literally the ones selling shovels in the Bitcoin gold rush. Seems like a very good strategy. Plus, all the rumors they mine with the hardware a bit before selling, which I tend to believe because it's the obvious thing to do (you earn some BTC plus do the burn-in, which lets you catch defective units early).
The % of the network they would control would be too high maybe? Fundamentally the value of their product is based on the price of bitcoin. A single miner that gets close to 50% might be seen a a huge risk and drive down the price.
Shorts? Conventional wisdom states that a 51% attack would destroy the very same value it would misappropriate, but when you can bet real money on BTC crumbling you get an entirely different playing field. Still very unlikely as everybody with that kind of hashrate is already rewarded far too handsomely, but if someone ever offers shorts on one of the smaller altcoins, I'd almost expect someone to state an at least cost-neutral attack just for kicks.
That's my point exactly. They sell them to other people to ensure that doesn't happen.
Now I'm not actually sure if they produce enough for that to be relevant. But my understanding is they dominate the asic market and asics are the only thing that are profitable for mining bitcoin. It could be if they didn't sell and mined themselves they would have enough mining share to cause people to lose faith in the currency and crash the market.
If that were possible, it would be a one time thing I am guessing. But it's possible to short bitcoin now I believe. So ruining the network/reputation could be profitable?
I mean, yes 20k is a big order, but to put that in perspective, it's at most the output of one small production line for one month, and more likely they're balancing it with other orders (and doing a ramp to verify the process before going full bore). It's still a tiny fraction of the foundry industry overall.
Here's one, people want to use bitcoin for transactions, as these blocks of transactions fill up, new hashes are needed for each block. The miners are finding these hashes and facilitating the continued use of the blockchain. I'm hazier on this one, but I believe transaction fees go to the finder of the hash? Anyway, wouldn't the value be is the protocol/platform itself, that's what people are buying in to, they want a usable, distributed ledger.
I think what confuses me is that the distributed ledger is nice and all, but will never be faster or even necessarily more secure than a central one (yes yes, some trust in government regulation like the SEC is required but if we put our antiestablishment pitchforks aside and consider that random actors MAY be more malicious than the people that regulate the financial markets).
So what do you get? People trusting "centralized" front doors to something distributed. Like coinbase or any of the other exchanges. Now you have literally the worst of both worlds. Centralized but still slower and more expensive, + lack of regulation. I'm just not seeing it as ever being useful.
Yeah, I can't really answer that one for you, I don't own any coins and I don't really have a need to (apart from maybe needing to be rich if I had bought some 2 years ago). We're right back where we started, just because we don't find any value in it, doesn't mean other people also don't. Sure, the market might be inflated at the moment and over valued but there's gotta be some truth somewhere in it otherwise people wouldn't have been using it for the whole time coins were cheap.
Unfortunately, these chips are designed explicitly for the SHA algorithm BTC uses. I wonder if there would be a way to make an algorithm based around protein folding that could be verified like a hash?
Nothing. This is all specialized silicon which is totally worthless for anything except mining Bitcoin. It's all going in the dumpster when the price crashes.
I think you're being too harsh. Right now silicon use is of course wrapped up in a loop of value derived from the coins being mined having value, but that completely disregards the actual value of the blockchains. An excellent quote I found is: "how to recycle what will soon or later be a HUGE obsolete distributed supercomputer dedicated to SHA-256."
It can make a large hostile network with extremely high computation resources act like a single computer with the performance of a 10 year old desktop.
Nothing more useful for humanity, I think. It is literally mining electronic gold which facilitates transactions removing need for trusted third party. You may not ever pay for something "useful" in your life in bitcoin, like you've probably never paid with gold, which is still useful for governments and big investors as store of value.
I think you are looking at it wrong; its like saying a bank teller or stockbroker or even a cash machine has no 'useful industrial application'. They are necessary for the currency to work, and they must be paid to do a job. I suspect paying a cryptocurrency miner their 'fee' is a lot cheaper (per transaction).
There's a non-zero cost with making stock trades, keeping money secure, and transporting money into an ATM machine.
There is a practical (as close as we can get) non-zero cost for moving bits around the internet. It seems like there should be a similar mechanism for building trust in the blockchain.
Has it ever happened before that a consumer of chips is among the largest customers of what appears to be the biggest foundry in the world?
(defining "consumer" as "we actually use & run that chip, we don't embed it or sell it"?)
Yes. In the 60s the United States Department of Defense bought most of the output of all semiconductor manufacture. I found a reference [1] that claims the DoD purchased 70% of the industry output in 1965.
[I don't know about Google but] lots of people do relatively specialized silicon. However, rarely that happens at the most advanced processes (i.e. low nm).
Google has a custom NIC ASIC derived from the Myri-10G family. Google has also designed the TPUv1, TPUv2, Visual Core, and Titan chips (that we know of).
It seems these large players will do everything in their power to make sure this bubble does not pop. I do not know the size of such investment, but it seems to me that these players have the ability to keep the price from crashing and keep the bubble from popping.
See, I had a different thought here. If anything, mining new bitcoins reduces the value of current ones. Correct me if I'm wrong, but what's keeping the bubble from bursting is more dollars coming in - big miners aren't doing that, they don't buy their BTC.
Unlike a clueless average Joe at home, they're running huge businesses, as this article suggests, so they're probably smarter. Does anyone know what the math here is? I'm assuming a) they aren't cashing out too much/too regularly because they're huge and this would drop the price too much and b) they aren't stupid to make huge investments like this, just hoping all would be well.
Where am I wrong? Is the number of fresh "investors" still big enough for all of them to have a steady cashflow? Do they believe they can get out before everyone else? Are they just like all other believers, but with deeper pockets?
The thing that you're missing is that Bitcoin mining has a fixed reward schedule that is independent from the number of miners. If you have more miners, that just means that each miner is yielding less Bitcoin (this is accomplished by scaling the difficulty level, which is currently 1,590,896,927,258X what it was when Bitcoin was released in 2009).
The result is that the only factor that affects whether someone chooses to engage is mining is if it is profitable.
Mining new bitcoins makes transaction easier, which improves liquidity of current bitcoins. That certainly should have a positive effect on the theoretical value of a bitcoin.
They probably think Bitcoin has a long way to go. I've talked to people who think it could reach 100k one day.
I hope this whole shenanigan ends sooner than later because now not only we have to pay higher prices for RAM due to smartphones but we also can't find a decent video card below $200. Fuck that shit.
There are a lot of replies in this thread talking about Bitmain like they're the miner, when in reality they're the mining supply store selling miners the shovels, hard hats, and so on.
Mining itself may be profitable, or it may not. But no matter what, the supplier should come out with a fairly healthy profit if they play their cards right.
If you mean Samuel Brannan, then you make money by diverting church funds to pay violent gangs to establish and maintain a shovel monopoly. Then you lose it all to a real estate crash and a divorce.
So the real lesson is be immoral, break the law, diversify and don't get married.
It's not like he is the only one who thought of selling shovels with huge markups.
That Morris Chang and co. came with bitcoin thingy to prop their sales knowing that if btc takes off, they are guaranteed to get orders for hash crunching machinery
Is there even a reputable source for this info, I'm not familiar with the guy who tweeted it. But if I was trying to further inflate my bubble I'd probably tweet stuff like this.
Anything that mentions bitcoin mining gets people worked up and negative for some reason. More demand for compute is a good thing long-term. More demand for video cards is great for all parallel computing long-term, hopefully someone besides NVIDIA seriously moves into the space.
I suppose that at some point it's going to become economically feasible to make integrated BPUs (...Bitcoin Processing Units...) and obviate the ASICs.
It is all about virtual digital mining, which is to race to find the first hash, that has X number of zeros in the front of it.
And this burns an incredible amount of electricity. And all for what? Just to show proof of work.
Can't there be a more useful usage of cryptocurrency mining to show proof of work?
Something that is more relevant to humanity. Like protein folding? Or planet hunting? Or pattern analysis? Or something else, that can be used to build an AI brain?