Bitcoin 'Miners' Face Fight For Survival As New Supply Halves (reuters.com)

SpzToid quotes a report from Reuters: On Saturday, the reward for [bitcoin] miners will be slashed in half. Written into bitcoin's code when it was invented in 2008 was a rule dictating that the prize would be halved every four years, in a step designed to keep a lid on bitcoin inflation. From around 1700 GMT on Saturday, instead of 25 bitcoins up for grabs globally every 10 minutes, worth around $16,000 at the current rate BTC=BTSP, there will be just 12.5. That means only the mining companies with the leanest operations will survive the ensuing profit hit. "The most important thing is to be the most efficient miner," said Streng, the 26-year-old co-founder of German firm Genesis Mining, which has "mining farms" in Canada, the United States and eastern Europe, as well as in Iceland. "When the others drop out, that means that they leave the market and give you a bigger share of the pie."

Comments

Other motivations

[stikves]

With smaller players dropping out of the game, soon it might become a "single player" game after all. If this scenario happens, then a single entity controlling 51% of the keychain nodes can potentially disrupt the entire BitCoin economy by effectively "rewriting history".

I'm not sure this is a good thing. Every advancement seemed to have moved the needle to this direction. While everyone was able to run CPU miners is was very democratic. Then GPUs came, but still people could drop in a few hundred, and continue. After FGPA, and the ASICs, it's not just very large firms, where smaller people can only "rent" nodes, and hope they can trust the infrastructure.

We might need a "reset", where ASIC is no longer viable, but I'm not sure that would still be possible.

Re: Other motivations

[Entrope]

No reasonable person wants to carry a dozen wallets to conduct commerce, even if they're of the cryptocurrency variety. There are huge network effects for having a de facto standard (crypto)currency in an area.

Re:Other motivations

[Anonymous Coward]

Yeah so does transporting gold bars or bank-notes by cars. Or running IT system of bank and transporting staff of it. Everything takes energy.

Or computer gaming

Greentards/libtards should ban using computers for "luxury purposes" or limit such use to 1kWh per day per house-hold, right? :P

Re:Other motivations

[sphealey]

Bitcoin: designed by a brilliant mathematician who had never read a macroeconomics textbook or intermediate-level survey.

sPh

Re:Other motivations

[codebonobo]

With smaller players dropping out of the game, soon it might become a "single player" game after all.

Be aware there are also strong forces occuring that are pushing the decentralization of mining right now. Most principly hitting Moore's cliff with ASIC manufacturing will insure that newer generation ASICs only are slightly better than older generation ASICs.

can potentially disrupt the entire BitCoin economy by effectively "rewriting history".

This isn't true and not the consequences of a 51% attack. History cannot be re-written by a 51% attack as the amount of energy needed to ourun the longest chain with the most proof of work going several confirmations back is insurmountable. This is typically why the historical record of bitcoin txs are referred to as "immutable" . A 51% attack could potentially create double spends or prevent txs occurring in the present, not several confirmations past.

We might need a "reset", where ASIC is no longer viable, but I'm not sure that would still be possible.

This is of course possible and the code has already been written in the event of an unlikely attack from miners. This is unlikely to be needed however because there are both forces that drive centralization of mining and forces that drive decentralization of mining and a more likely outcome in the future is a mix of p2pool mining with some large industrial locations.

Re:Other motivations

[sphealey]

An inherently deflationary currency in a world that has experienced 300 years of continuous economic and population growth - what could possibly go wrong?

sPh

Re:Other motivations

[Solandri]

I'm not sure this is a good thing. Every advancement seemed to have moved the needle to this direction. While everyone was able to run CPU miners is was very democratic. Then GPUs came, but still people could drop in a few hundred, and continue. After FGPA, and the ASICs, it's not just very large firms, where smaller people can only "rent" nodes, and hope they can trust the infrastructure.

Which causes deflation (need less of the currency to buy the same thing - in other words the currency's value goes up). Which is the whole reason countries moved off the gold standard. The rate at which new gold was being mined was not keeping pace with the rate at which the economy was expanding (population and productivity increases), causing deflation, which destabilized the economy (you could "make" more money by stuffing it under a mattress, than by using it to do something economically productive).

We might need a "reset", where ASIC is no longer viable, but I'm not sure that would still be possible.

Which is exactly what governments do with a fiat currency - adjust the availability of the currency to stabilize and moderate its value, to maintain a slight inflation rate.

And we've come full circle. The folks who rejected fiat currencies and advocated bitcoin have learned the lesson governments learned with gold eighty years ago, and are advocating changes to make it behave more like a fiat currency.

Ive said it before.

[Anonymous Coward]

This is precisely why Bitcoin has always been a scam. If you weren't in on the ground floor you get screwed.

Re:Ive said it before.

[Luthair]

I've always said it was a pyramid scheme. For early miners it was very easy to mine and each score was bigger, but the system relied upon ever more people buying into the scheme to create value.