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Comment by trixie_ | Hacker News Reader

'Bitcoin is the product of hashpower. The industry wouldn’t exist without incentivizing miners to continuously invest in hardware and burning electricity to augment Bitcoin network’s settlement assurance'

I think this is a common misconception. People don't need to continually invest in mining hardware to keep it going. The entire Bitcoin network could technically be run off a single Rasberry Pi. The network hash rate is only so high because the ROI is there, but without it, people would still be mining.

Case in point, there are plenty of long forgotten altcoins out there that people are mining just for fun. At the end of the day your computer is no different from an expensive space heater. Might as well mine some crypto with it.

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> At the end of the day your computer is no different from an expensive space heater. Might as well mine some crypto with it.

Or, you know, you could just turn the computer off while you're not actively using it. It saves you money and does a small little good thing for the environment too.

That is why I made the analogy to a space heater - because mining would be a free side benefit of something you actively use to keep warm.

The environmental impact is also negligible if the power you're using is coming from solar or wind.

An idle computer clocks down and sips power. Going full bore mining coins results in significant power usage increases. We're talking 10 watts vs 100s of watts.

Small space heaters run at 750 watts on the low setting.

A single Bitcoin miner runs at 1500w on its only setting and sounds like a small aircraft preparing for takeoff.

That matters if you live in Texas. It doesn't matter if you live above the Arctic Circle.

Right but if your goal is to heat your apartment (and your alternative heat source is also electric) running the computer is a pretty efficient heat source.

Well, efficient is hardly the right phrase. When it comes to heating using electricity then 100% efficiency is on the low side. A heat pump could be many times more efficient.

I just also want to add that gas heating is also effectively >100% efficient relative to electricity because there are no losses incurred on the power generation side.

That depends on how you're making that gas. IIRC algae (the primary ingredient in most fossile fuels) are less than 10% efficient at converting sunlight into chemical energy after metabolic expenditures. (There's also the part where the sun is <<0.00001% efficent at turning fusion energy into sunlight-that-hits-earth, but that problem isn't specific to gas heating.)

It is sad that "heat" and "efficiency" are defined like this...

"100% efficiency" should be the Carnot's theorem efficiency limit...

What people say is that all electric heat is equally efficient in the sense that all the delivered watts ultimately become heat, but at least in the general area where I live, electric heat of any kind is not efficient in the sense that it is significantly more expensive than burning fuel (natural gas, oil, etc.) at home.

The other common misconception is that the price of bitcoin is determined by the hashrate. It is actually the other way around, a higher price drives up the hashrate, because a higher price means more demand for bitcoin.

Some founders of altcoins apparently don't understand this and try to buy hashpower to artificially increase the hashrate, hoping to increase the price of their coins. If there is no demand for their coins, an ASIC farm is no different from a Rasberry Pi.

Wait... isn't it worse than that? If I buy enough hashpower to have a measurable effect on the price, shouldn't the price be driven down, by the increased supply? Thus an ASIC farm is worse than a raspberry pi, at least as far as the effect on price goes.

(But, isn't there some majority attack? So maybe I want an ASIC farm as a way to protect my investment...)

no, the mining difficulty self-adjusts, so the supply is only increased for a very brief time

No because the supply is fixed in time

The supply is fixed in number of blocks, not time.

Supply of what? The supply increase of coins is constant regardless of the hashrate.

This is exactly why there was no effect on bitcoin price when the reward rate halved. The value of the coin drives mining behavior, not the other way around.

Actually, it doesn't. The difficulty adjusts every 2016 blocks, in theory every ~2 weeks, but if a large percentage of the hash power suddenly disappeared it could be much longer.

For a temporary period of time, before it self-corrects back to ~2weeks. It's easy to leave this part out as it is an edge case that doesn't need the extra sentences qualifying the "normal case" that will be observed 99.99% of the time.

The price is not determined by hashrate, but hashrate is nevertheless an important metric for the market to determine the price.

An altcoin that has insufficient hashrate is highly vulnerable to attacks and if its price were to rise, those attacks would become profitable.

Therefore, you need enough hashrate to make attacks unprofitable right away. A Raspberry Pi is not going to cut it.

The most easily achievable way for attacks to be unprofitable right away, of course, is for your token to be worthless...

Hashrate determines the difficulty to attack, aka security. Security influences the price.

The image of people mining in their residences is the furthest from the truth about crypto mining.

It uses primarily renewable resources or is repurposing pollution directly. This is the only economical way to mine. The vast majority of mining power is done this way, upwards of 80%. How much energy is being used is a purposeful misdirection.

That argument, unfortunately, is a slippery slope. One could list a gazillion things that are good for the environment. The environment argument against Bitcoin has been thoroughly debunked.

There are several valid points of criticism against Bitcoin. I wish more effort is put into it to criticize it along those fronts.

> The environment argument against Bitcoin has been thoroughly debunked.

Nonsense, every bitcoin mined is unnecessary for the environment.

I think you're missing the point.

For Bitcoin to continue to act as a decentralized currency ledger (with "settlement assurance"), then the network hash rate must remain high.

Nobody is arguing that the code couldn't run on one processor, only that cryptocurrencies conceptually depend on this high hash rate

It doesn't 'have' to be high. The hash rate could be 1/1000 of what it is today without any risk to 'settlement assurance'

https://www.crypto51.app/coins/BTC.html

You could pay $384k to hire miners to 51% attack BTC right now (that is, if NiceHash had the capacity). If you cut the hash rate that much the cost would be only $400 or so.

Does it sound like a secure trustless currency if anyone can pay $400 to gain 51% majority?

EDIT: 51% attack != rewrite blockchain

There's a big difference between rewriting all history and rewriting a portion of it during an attack which costs 400k per hour.

Also people may misinterpret 'rewriting history' as the ability to to change coins sent from A -> B to A -> C. Which it is not.

Not saying an attack still isn't bad, but let's be clear what the extent of the damage could and could not be.

1: It's actually, under your proposal, "rewriting a portion of [history] during an attack which costs 400 [not 400 thousand] [dollars] per hour".

2: If you are A (and regardless of whether you're also C) and you sent money to B during the 400$/hr (less than a high-profile lawyer, and probably faster to boot) attack, then yes, changing coins sent from A -> B to A -> C is exactly what you can do.

Though that's also assuming people don't do anything about the blatant attack.

True, but if such a attack only costs 400$/hr there's going to quite a lot of them to do things about.

It's almost like if it were true that if it only cost $400/hr to 51% attack the BTC chain, we would actually see it happening much more often.

Exactly, that's (very roughly) why it not only is, but must be, that you cannot, in fact, reduce the hash rate significantly without compromising the integrity of the ledger.

That depends on how you define integrity.

If we cut the hash rate tenfold, which is definitely significant, you'd still need to find someone who has hundreds of thousands of dollars of motivation to perform an attack. Having that motivation is hard when it takes a huge amount of double spending all at once, the attack will damage the integrity of the coin, and clients can be modified to be highly resistant to it.

> which costs 400 [not 400 thousand] [dollars] per hour

No, it's $400,000 per hour.

0.009 BTC/PH/day to buy from NiceHash (https://www.nicehash.com/algorithm/sha256)

100,000 PH/day total hashrate of BTC network (https://www.blockchain.com/charts/hash-rate)

That's 450 BTC/day to buy 50% of the hash rate (as if you even could, that in itself is a ridiculous notion - NiceHash says they have only 300 PH).

Or 18.75 BTC/hour. Or $185,000/hour.

Of course, you're not going to buy 50% of the network's currently running hash power. You'd likely need closer to 100% of the network's current hash power to gain 51%. So, $400,000/hr.

I mean really, does it pass any sort of common sense test that you could 51% the bitcoin network for $400 per hour?

> The hash rate could be 1/1000 of what it is today

> If you cut the hash rate that much the cost would be only $400 or so.

> during an attack which costs 400k per hour

> under your proposal [of reducing the hash rate by a factor of 1000]

Perhaps I should have been more explicit, but it certainly isn't necessary.

> So, $400,000/hr.

Which, if the hash rate was "1/1000 of what it is today", would be reduced to 400$/hr.

Correction: pay $400/hr to gain a temporary majority in the block mining lottery. You can do a variety of things with that majority power, but “rewriting history” is a bit misleading. Yes, you can probably get the network to discard some previously accepted blocks, but this only allows you to invalidate your own transactions plus the transactions that depend on them.

Furthermore, any blocks that were mined under high hashpower still need the same hashpower to be re-mined. A one-time reduction in network hash power doesn’t make previously mined blocks easier to mine.

Wouldn't you be able to buy goods, reverse the transaction, and buy more goods? That seems pretty significant if BTC is supposed to be ubiquitous (large transactions don't raise eyebrows) and cheap to use (meaning cheap to hash and cheap to takeover).

Depends entirely on the policies of the merchant from which you’re buying goods. I have to admit, I had to read a couple dozen research papers about (theoretical) attacks on Bitcoin before I really understood the nuances. I’m expecting main chain transactions to be relatively expensive, but off-chain solutions can still be cheap. Yes, this requires some trust of a third party, but for small transactions that’s probably unavoidable. Not all transactions are created equal, and trustless settlement is expensive.

Correction (where are you folks learning math? $400/hour, do you even have common sense?):

0.009 BTC/PH/day to buy from NiceHash (https://www.nicehash.com/algorithm/sha256)

100,000 PH/day total hashrate of BTC network (https://www.blockchain.com/charts/hash-rate)

That's 450 BTC/day to buy 50% of the hash rate (as if you even could, that in itself is a ridiculous notion - NiceHash says they have only 300 PH).

Or 18.75 BTC/hour. Or $185,000/hour.

Of course, you're not going to buy 50% of the network's currently running hash power. You'd likely need closer to 100% of the network's current hash power to gain 51%.

Another caveat: pumping $384k/h into NiceHash would probably change the supply/demand dynamic drastically and increase the price.

Definitely. I don't really think this hypothetical attack would be possible, I only bring it up to demonstrate the effect that lowering the hash rate would have on the cost of disrupting the network.

Let's not get hung up on details, if you have the resources to consider 51%ing Bitcoin for presumably nefarious purposes, you're probably a government/big finance/oligarch actor and you're probably not penny pinching.

Settlement assurance is roughly a function of (a) the expected cost of mining a block and (b) the total value of bitcoins moved in that block. In general, the larger the ratio of a to b, the less time a merchant must wait to reach a certain level of assurance.

I haven't read the article, but I believe it will say something like, the continual investment is necessary in order for the transactions to be irreversible (settlement assurance). I'm sure there are some forgotten altcoins out there still chugging along, but it probably does not take much money to hire sufficient hash power to double-spend those alts, or even re-write their history.

For as long as bitcoin miners fight, tooth and nail, to hash incrementally more efficiently than their competitors, it will be prohibitively expensive for most actors to reverse transactions.

Not saying this isn't a possibility, but you'd think in the last 5 years of thousands of altcoins this sort of thing must of happened at least once? I guess the interest has to be there to attack it? Though if the interest was there more people would be mining it. Something like that.

It... has happened. Multiple times.

Bitcoin Gold: https://cointelegraph.com/news/bitcoin-gold-blockchain-hit-b...

Vertcoin: https://www.coindesk.com/the-vertcoin-cryptocurrency-just-go...

Ethereum Classic: https://cointelegraph.com/news/ethereum-classic-51-attack-th...

Google is happy to show you more.

Right, I guess I feel less at risk of being the victim of a double spend and more at risk with rewriting history. Are there any reports of that? Like coins I've held on the chain for some time being stolen?

The value of your long-held coins will be almost nothing if the network is vulnerable to double spend.

The potential losses are huge (especially for exchanges etc.) from double spend attacks, and the value of a cryptocurrency is very much dependent on users' confidence in its resistance to attacks.

Good. My long held worthless altcoins will remain worthless and mine regardless.

Weirdly, this doesn't seem to be the case. Coins with no hashrate like BCH are still trading at pretty high prices. https://cointelegraph.com/news/bitcoin-cash-could-face-51-at...

You're correct, and the market is always right after all.

However I am confident based on previous events that BCH prices will trend strongly downward when news of the next successful 51% attack is released.

BCH does have a significant amount of hashrate. A 51% attack being possible is one thing, it being profitable is another.

If it's not profitable, it is unlikely to happen. If Hashrate was to drop significantly without commensurate price drops, attacks will happen and then the price will drop to compensate.

If you're just holding coins you're "safe" in the sense that you will get to keep your account balance.

However, if the network is unstable, then that balance will lose value in real terms or even become worthless.

If you sell something in return for coins, and the network could agree on a fork of history in which you never received those coins, not all your balance is safe. Either you trust the network operator(s) not to accept a fork, or you trust the implementation to make a winning fork infeasibly expensive (51% of all miners).

The question was "Can a bad actor steal the coins I am just holding, not spending or receiving?" and the answer is generally: No.

A double spend is generally what people mean by "rewriting history".

A 51% attack only lets people steal money by taking back recent transactions and sending them elsewhere. Transactions that have been received a long time ago are generally safe. (An attacker can reach further back in time if they run the 51% attack longer or with even more hashpower.)

This is not quite right.

51% lets you rewrite arbitrarily-deep history, limited only by how much time you're willing to spend on the attack. You have more hash strength than the rest of the network combined! You pick some ancient block and start building blocks off of it, and the very definition of a 51% attack is that your new fork will eventually outgrow the "real" fork.

Double spends are possible well before 51%. Even a 10% attacker has the ability to (sometimes) double-spend. A 10% attacker can try to double-spend transactions and has a certain chance of being able to. The chance of success decreases exponentially, the deeper in the chain the target transaction is. However, for a high-enough value transaction, attempting to double spend it can have a higher EV than the mining revenue you lose out on by mining honestly.

I keep wondering what pushes people to stay in the ecosystem of the forked chain that quote unquote lost the fight.

Bitcoin Gold was hit by double spend multiple times, and that's just what I remember off the top of my head.

However there are obviously diminishing returns for such an attack. The alt coin value drops drastically when users find out about the attack and flee to more secure currencies.

> At the end of the day your computer is no different from an expensive space heater. Might as well mine some crypto with it.

i mean... it wouldn't be a space heater if it wasn't crunching pointless numbers...

The point of the numbers is to prove that you heated space. Seriously. It proves that you burned value that you know you are not getting back if you are caught falsifying records for the system. And, everyone knows its extremely hard to not get caught if you try. Therefore you can be trusted to sign records for the system because you are risk:reward tremendously more financially motivated to be a good actor than a bad one --including whatever nefarious scenarios you might imagine.

i understand the idea of proof-of-work. but idk, when i think about all that electricity and computing power wasted on guessing arbitrary numbers... just doesn't feel right

kind of reminds me of how FAANG job interviews require memorizing not-very-useful algo stuff to weed out people who "aren't motivated enough" to study that stuff for the interview¹... "proof-of-motivation" if you will. it serves a purpose, but requires "burning" a lot of ultimately pointless effort

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1. at least that's what people say about them, never interviewed there myself

"Pointless" only matters if it is "a lot" and "a lot" is relative. It seems like it has not been possible to resolve the question of whether the effort is necessary. If you suggest that existing monetary systems have orders of magnitude lower overhead, particularly fiat money, then people will argue that all sorts of costs are hidden. But I don't believe it makes up the difference, and I attribute peoples' willingness to believe it to the assumption/belief that anything that virally spreads cannot be drastically worse (in some dimension).

Nature is full of examples of intentional waste as a form of signaling: https://en.wikipedia.org/wiki/Signalling_theory

That said, IMO Proof of Work is indistinguishable from Proof of Stake with extra steps. And considering the massive environmental externality of Bitcoin mining, I want to see the major nations heavily tax, if not completely outlaw, Proof of Work mining.

> The entire Bitcoin network could technically be run off a single Rasberry Pi. The network hash rate is only so high because the ROI is there, but without it, people would still be mining.

That's a bit of a naive view. It's like saying, we don't need this expensive security vault in our bank, we could just store it all in a shed.

the proof of work is crucial to the proper functioning of bitcoin, and if the only miners were running on a raspberry pie anyone could come along and do a >50% attack stealing what they want.

> At the end of the day your computer is no different from an expensive space heater

This has been false for probably a decade or more. Pretty much any modern processor has dramatically lower power consumption when not under load through a combination of things like clock adjustment, powering off cores, and even dynamically adjusting voltage. This is part of why smartphones have battery life measured in dozens of hours instead of 1-4 hours.

> The entire Bitcoin network could technically be run off a single Rasberry Pi.

But can that be done practically? At some point you lose the ability to tell which of the forks is 'Bitcoin' and which are 'pretender' altcoins.

I can imagine a future where you run a chain for 6 months on a Pi then someone turns up with an ASIC and writes a new 6 month history and calls it Bitcoin instead. The risks of shenanigans would be huge.

In order to maintain network stability at current prices of Bitcoin, a massive amount of hashrate is required.

Those altcoins that have become worthless and are mined "just for fun" are only protected by the fact that they are worthless. Any attack would be a waste of resources. You could still attack them "just for fun" of course...

Not really. They are cemented into those blockchains. Unless you have a way to back write a blockchain.

That's kind of the point, you can back write a block chain with enough hash power. Just go back a few hundred blocks in the chain, and "fork" into an alternate chain. If your chain can catch up and become longer, you win.

This happens on a micro scale every day, when two people "solve" the next block at the same time. Inevitably, one of those forked chains gets longer and the other one is abandoned or "orphaned".

> The entire Bitcoin network could technically be run off a single Rasberry Pi.

Pedantically, a rpi wouldn't meet the target interblock time because of minimum difficulty.

But a system using a single 2014 era 800w shoebox sized mining device could meet minimum difficulty on its own.

Doesn't the hashrate need to stay high for security reasons? If miner participation is low, can't bad actors dominate the system and produce false transaction?

If the hashrate ever collapses isn't the whole system at risk?

> The network hash rate is only so high because the ROI is there, but without it, people would still be mining.

Can you expand on that? What would be the incentive for the miners then? What happens when all blocks are mined?

You never mine all the blocks, and regardless of the reward there is always a transaction fee which incentives mining.

Regardless though my point about space heaters was that 'being warm' is enough incentive for some people to mine crypto.

If ROI goes down, fewer miners will mine. When all blocks are mined, transaction fees will be the main source of incentive to mine.

> At the end of the day your computer is no different from an expensive space heater

In most of the US, at least, you want AC and not heat at least 7-8 months out of the year, if not more.

It also works with solar and wind.

No it doesn’t. Because the computer is still exhausting heat that makes the AC work harder.

The AC is also solar powered.

It's been a long, long time since your computer drew the same power independent of processing load.

And there are altcoins without mining.

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