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Comment by shawabawa3 | Hacker News Reader

Bitcoin is approaching the next difficulty retarget (in approximately 10 hours) and the difficulty will increase by around 10%.

If bitcoin price collapses to say ~$3000 we could see a significant portion of miners give up. This would increase the block time, which in turn increases the adjustment period (which happens every 2016 blocks, ~2 weeks at 10min/block).

An extended period of time with very long block times could cause the price to collapse even further, causing even more miners to leave...

I think there will be some determined miners willing to mine at a huge loss (due to having large bitcoin reserves) so the difficulty will eventually drop down, but there could be months of barely moving bitcoin which on top of the huge crash in the market right now could kill off bitcoin for good

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I can only hope.

I don't care about Bitcoin, but they've been preventing me from finishing this system build. If it had been useful, I wouldn't mind so much.

This chicken game won't do anything to dampen GPU prices. All Bitcoin mining is done on ASICs.

Bitcoin not so much, a drop in Ethereum miners etc will have an effect.

Blockchain currencies have correlated price movements. Bitcoin rose and so did the others; bitcoin is falling and so are the others.

Other asset classes show similar behaviour. When the share market dives, the individual fundamentals of companies suddenly have much less import. During a surge, ditto.

Why not blame the companies that makes the GPUs?

Because GPU manufacturers don't want to play chicken with Eth prices either. If they double manufacturing capacity and the market collapsed they would be screwed.

So the customer is responsible for metering their usage of said products?

Where is this assumption coming from that there is even a problem? Demand goes up, prices go up. Sorry you can't buy a GPU as cheap as you could a few months ago, that's life.

I can't get the GPU I need. That's a problem for me.

You can argue that it's also the market working correctly, but if you drop the 'market' abstraction and look at what people are actually doing, they're burning a lot of power and resources for no actual useful purpose and causing minor problems like this in the process.

At best, this demonstrates a coordination problem. If we're so bad at coordinating that we can't build a functional economy even with the minimal central control implied by fractional reserve banking and central banks, but have to do stupidly inefficient things instead of having even a single trusted party, then humanity sucks rather more than expected.

At worst, well. The above isn't actually true. The existing, fiat-based economy works just fine, and Bitcoin doesn't. It's inherently deflationary, it's a prototype -- all the things so many people have already mentioned. So why are we doing it?

> I can't get the GPU I need

You mean you can't get the GPU you want at a price that fits your expectation.

> then humanity sucks rather more than expected

Interestingly I think it may be beneficial to adjust your expectations in this area too.

> The existing, fiat-based economy works just fine, and Bitcoin doesn't.

It works fine for you. Also bitcoin isn't the reason GPU prices are high, it is other cryptocurrencies and interestingly they actually work because they aren't being intentionally destroyed from the inside out.

> It's inherently deflationary

Doesn't matter, and guess what, when people have a choice in their currency, they aren't going to choose something that inflates.

> it's a prototype

According to who and what definition?

Bitcoin isn't. Bitcoin mining on GPUs has been dead for a long time.

The more likely cause is that the GPUs you want are ending up in deep learning projects or some niche altcoin miners.

That said,altcoins have always tended to go up and down together with bitcoin

And people who drive cars tend to experience sudden deaths. It's not the driving that kills people, it's the car crashes that do.

What I'm trying to say is that this is just correlation not causation. It's not Bitcoin going up that rises your GPU prices, it's Ethereum and the fact that it uses GPU-based mining. If no cryptocurrency used GPU-mining, then your GPU prices wouldn't rise, even if the the prices of cryptocurrencies went up by 100x .

Do you see how correlation is different than causation?

It's not Bitcoin doing that. TheVerge (or whoever told you it's Bitcoin's fault) are idiots for calling it the "Bitcoin mania" recently as the reason for your high GPU costs. Bitcoin has nothing to do with GPU prices as no miner uses GPUs. It's Ethereum and other GPU-mining cryptocurrencies.

If it is true that some Chinese miners are using Bitcoin to funnel money out of China, then I could also see them continue mining at a loss.

Let's say half the miners stop mining. This would make it twice as likely that the remaining miners will mine each new block, right? If so, then this acts a bit like a price doubling from their perspective which would counteract the disincentives you mention. Perhaps a new equilibrium will emerge that's not quite so extreme because of this effect.

> This would make it twice as likely that the remaining miners will mine each new block, right?

Not immediately. The "difficulty" of each block adjusts every 2016 blocks, the algorithm takes the average time between blocks and changes the difficulty accordingly so that the expected time becomes 10 minutes.

If half the miners stop mining, it will take around a month to mine 2016 blocks to trigger the difficulty adjustment, and that's if none of those miners stop mining before the adjustment happens. If the price keeps dropping and miners keep stopping, it could be 2 or 3 months before the adjustment happens

Yes, but even if the block time is longer, the probability that I will "win" the block goes up. Someone has to mine the block and if half of the competition goes away my chances go up. This incentive will counter the temptation to stop mining, dampening the effect you mention.

Miners don't compete directly to "win" blocks. If everyone except a single miner stopped mining right now, that last miner would mine 100% of the blocks. However, they'd still make exactly the same amount of bitcoins as if everyone else was still mining - until the next difficulty adjustment

I see. Thanks

Is there a good reason for the difficulty adjustment period being 2016 blocks? What would be the consequences of reducing this number?

I'm not sure what the reasoning is, but to be honest I don't think it's a good system. Block time averages have been about 9m30 since bitcoin's inception, so it's clearly not good enough to properly target 10min/block

When bitcoin cash forked they changed the period to 144 blocks (along with some other changes i believe?), so they have a much smoother difficulty graph.

Keeping an eye on Craigslist for a good GTX deal.

When miners give up, difficulty decreases, miners come back in. Checks and balances.

If difficulty decreases substantially, it may convince some to re-enter, but no where near as many as exited; otherwise they’ve wouldnt have exited? Still a huge net loss.

Also, more of a natural equilibrium than checks and balances.

I discussed that in my comment... But difficulty doesn't adjust fluidly, it's every 2016 blocks. A sudden decrease in hash power causes a sudden increase in block times, which means an increase in the time until the next adjustment

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