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Comment by helsinkiandrew | Hacker News Reader

> When miners can't cover costs, they sell bitcoin to fund operations

Surely they should stop producing until its profitable again, or am I missing something?

If everyone stopped mining transactions couldn't go through anymore and the value of bitcoin would drop. If you're heavily invested in bitcoin that's bad. Also miners try to squeeze in their preferred transactions which they can't do when they're not mining. Finally the costs dont drop to zero when you turn the miners off, so the loss from mining might be less than the loss when not mining.

He's not saying everyone, just the ones who are unprofitable. Not everyone mines bitcoin at the same cost. The ones who do have to stop can also profit from curtailment depending on the price of energy relative to hash profit.

Isn’t mining and transactions separate? Sure you need to have online participants, but they don’t have to actively mine, right?

No, mining is exactly what makes transactions go through, computing the next result in chain, certifying that the transaction happened.

You can generate transactions but ultimately transactions are validated and written in the blockchain by miners. Mining is essentially a way to select voters based on their ability to solve puzzles, ensuring that if you are selected once you have no particular advantage next time. Without miners this whole system doesn’t work.

What? That's not true. You don't need more than one CPU miner online for tx to go through. That's why there are difficulty adjustments.

But as number of miners drop arent btc at risk of a 50% attack?

But if you have anywhere near the market power to do a 50% attack, you can make a lot of money mining.

It's a very low effort article. There are several places where the cost of electricity is roughly zero and state actors have interest in Bitcoin (Iran/Russia) or strong actors more powerful than the state (Libya/Venezuela). It's not surprising that this is good news for them as mining rigs for Bitcoin are much lighter to transport than the ones for oil.

If you've already bought a miner, you will mine until the price of electricity exceeds the revenue from mining. If what's left over after paying for the electricity isn't enough to pay for the cost of the miners (and other already-committed fixed costs), you might make a loss, but still be incentivized to continue to at least recoup some of the loss.

When I was mining circa 2017 - 2021 (approx. 1 BTC/month and 25-30 ETH/month) and planning it all out, I prepared myself psychologically to operate for up to 2 years without any profits or selling. It was a hard pill to swallow and a huge risk; my costs were $8500/month in electrical and then another ~$2200 on a lease for the warehouse. When it dropped to $3,000/BTC a few months after I came online and stayed there for 6-8 months, I started wondering if I was the biggest dumbass in my county.

Thankfully, it all worked out in the end very well. I don't know how anyone would put in the effort/money to get a major crypto farm going and plan to just cash out every month to pay bills. What's the point? I always thought of it as a long-term bet on the price going way up, which it did.

Seems like you could have made that same bet by just buying BTC with that money and doing twice as good.

I dunno, probably only if you don't count for human psychology. If they bought N BTC and tried to held them, would they still hold them when they double in value? What about increasing 10-fold?

Compared to doing some work to getting 1 BTC per month, which you can then individually decide what to do with, instead of a lump sum you could cash out at any moment.

This was my great failure with Bitcoin. Bought in at $100, had many coins at $400. Sold most of it by $3000. Hard to not cash out when your investment goes 30x. In hindsight… ugghhh.

I mined in 2014 with free electricity and that was true even then. That's with hindsight though, the mining reward is more predictable than that market price would increase (more than) equivalently.

Up to a point; once it was over $12k or so, it was cheaper to mine them than to buy them. But yeah, I guess in retrospect I could have just dumped ~$450k into buying BTC when it was at $3,000 and made 3x what I ended up making, but there were other considerations for why I did it at the time. The mining was co-located with my cannabis grow/operations, and in many ways the mining was started secondary to that, even though the mining ended up being a little more profitable over the life of the facility

> The [bitcoin] mining was co-located with my cannabis grow/operations

HN quote of the day!

So its true what they were saying about bitcoin. It is used by criminals.

If you bought a bunch of hardware to mine bitcoins, then not using that hardware represents a 100% loss of value. You may lose money producing, but you would lose even more money not producing.

You're not missing anything. As you can see if you read through the thread, they rely on bitcoin miners being heavily invested into bitcoin and bitcoin equipment, so those people will operate unprofitably to prop up their holdings. It's a moron's economy. A system that relies on externalities and corruption, and produces nothing of value. It's the art market with no art.

If bitcoin miners are smart enough to have anticipated this, and decided not to hold onto bitcoin and just let it drop; and also to have repurposed their equipment, sold it to bigger fools, or have just run it into the ground, none of these ideas make any sense.

Why would they, though? The real answer is that governments and monopolists are propping up bitcoin through simply handing tax money to bitcoin holders, and in the case of the latter (also government tit-suckers) leveraging themselves to pump up bitcoin markets when they are down. I'm sick of humoring this because it was once mildly interesting technically. It's a criminal scheme and everyone involved needs to go to prison. When I hear a politician say the word bitcoin, I'm going to do everything in my power to damage that politician.

I need to buy a service. The service is provided in the US, where it is a grey area service. The service provider is not trustworthy enough to give it my credit card, and it doesn't accept neither paypal nor stripe. Unsurprisingly, it accepts bitcoins.

The way bitcoin exists, the provider accepts bitcoin; it doesn't accept other crypto. I would rather bitcoin, or something equivalent to exist than not.

There is also the case of people who hold value in bitcoin because it is more stable than their banks; go figure. This was the case in Argentina and Venezuela. That was also a gray area, but I think it would morally acceptable to do that even if it was prohibited

What did folks in Argentina and Venezuela do before Bitcoin? Perhaps that's even better?

Decades ago, in my country it was illegal to hold dollar bills. Naturally, you couldn't have dollar bank accounts. What was done back then was to illegally keep bills inside bags, hidden, and pray god they weren't found because you would go to prison.

The alternative is not holding money yourself. Buy everything as soon as you can, and hoard physical goods, which is cumbersome, dangerous and inefficient. Bitcoin is an upgrade in all senses.

If Bitcoin were similarly illegal, would it still be an upgrade?

Yes. It will always be better than holding illegal bills.

I am talking about normal people who want to take money out of the country. if you own a shop you will know how to surf the hostile environment; they probably already have contacts.

You're missing that humans are often irrational.

They may be hoping it goes back up.

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