BTC Hashrate dropped another 27% down ~62% form peak now at 2019 levels
bitinfocharts.com
bitinfocharts.com
I would correct your statement: 1. Greater hash power makes the system more secure from attack 2. A large amount of hash power geographically concentrated is a weak point 3. More geographically dispersed hash power is better. 4. Ideally a large amount of globally dispersed hashpower provides the best security.
-- Disclosure: I do not currently own any BTC.
Not necessarily. There's a lot of "latent" hashpower ready to join the fight if bitcoin gets under attack, including random people and orgs around the world and the current miners themselves aswell: a lot of them mine other cryptos aswell, and could diminish their mining intensity on them to devote hashpower to bitcoin wars or stop altogether.
Unless I'm gravely mistaken about the bitcoin protocol, you wouldn't know that bitcoin is under a 51% attack until it completes.
The 51% attack succeeds when the attacker's blockchain becomes longer than the publicly-accepted blockchain. But there's no reason that the attacker needs to show their work publicly; they can start in secret, mine blocks, and reveal the entire chain at once after it is some number of blocks longer than the public chain.
there are 2 parts: one is mining the block, the other is propagating the block.
if you do what you describe, computing blocks would not be enough. you would also need to recompute blocks to account for what happened on the block chain since the split. the more time it passes, the more computing power you would need.
when people talk about 51% attack they usually talk about the double spend issue. this requires 1) a large number of nodes (>51% of the network) and 2) a large amount of hashing power. you would spend some bitcoin, let it be captured in the chain and after that you would fabricate a block that spends the coins differently. now you’ve spent it twice. the miners would pick this as the longer chain and keep going. the important thing to remember is that you cannot keep your chain in the shadows and that this type of attack would be a really hard to pull off (have you ever synchronized a lot of machines to do something? it’s incredibly hard)
But yes of course, this is good for Bitcoin. Everything is good for Bitcoin.
By the same token I could say all the power (and pollution!) used by the US military given that it's actively hostile to my country is a waste, bad for the planet and I wish it went away, but that wouldn't be too fair towards US citizens or their allies.
> But yes of course, this is good for Bitcoin. Everything is good for Bitcoin.
Well, Bitcoin is cleaner for now, wasn't that one of the greater criticisms levied towards it? I'm pretty sure by now that it could be found that mining Bitcoin cures cancer and AIDS by tomorrow and detractors would still find a reason to criticize it. I don't think there's a way to win, so I don't bother.
You could make that claim, but of course, if the US military went away I suspect more than a few people would notice.
However, Bitcoin continued to work exactly as well without the extra hash rate. No byzantine generals were harmed in this hash draw-down. As such, when I say it made no difference, I mean it.
Mining exhibits an un-damped positive runaway condition with respect to price, as price goes up it becomes more economical to mine. As such you can waste more power and add unnecessary extra hash capacity and make more money. Not just can, have to, as others do so, to avoid getting left behind. Full on prisoner's dilemma. When 70% of it disappears en masse, it makes no difference.
> Well, Bitcoin is cleaner for now, wasn't that one of the greater criticisms levied towards it?
For sure, but it won't last, that's kind of my point.
The criticism is that it's roughly speaking the least efficient system humanity has ever implemented. Moving a mountain with a spoon is likely more thermally efficient. That hasn't changed, really, it's fundamental to the model.
Maybe, but setting bitcoin aside for a moment, the blockchain and the distributed trust is a revolutionary technology.
Imagine people complaining about how much cars pollute and how we should stick with horses. Are you willing to give up your car and everything that has an internal combustion engine?
so you would have more expensive imports, maybe. and you would move to produce things locally. also, the cheap imports are cheap because there is a human price (ie basically slavery) paid at the origin. if you produced things ethically they would be more expensive rendering the navy useless as you would once again shift to producing locally.
also, since when does the us navy provide this service? i mean maybe it provides it, but i have a hard time believing it protects all the shipping lanes all the time (ie other nations surely protect their trading routes)
However a lower hash rate means less security, but if it is temporary reduction, whilst equipment moves elsewhere, this reducing reliance on mining in one nation, then the reduction in hash rate in the short term is not ideal, but has long term benefits for the network.
Given there is no intrinsic worth of BTC, rather just the collectively belief it is worth something, these incentives are very strong with BTC.
Explain how this is any different from the US dollar? What is the intrinsic worth of USD?
The value of Crypto comes from the decentralization (no need for trusted third parties), and is proportional to the hashing power of the network. Upstarts can easily be 51%ed by an incumbent with a large mining infrastructure of the same kind... But this holds as long as people with destructive power let them run.
The primary difference is that people have to pay taxes and monthly payments on their debt. Every dollar created has to be returned one day. This ensures the continued existence of USD as a medium of exchange. Once something turns into a "store of value" it ceases to be a good medium of exchange.
The ability to eat something is not what makes it a store of value. Milk is a TERRIBLE store of value for time frames greater than a few weeks, for instance. The USD is a store of value as it is relatively stable and so you know that you'll be able to leverage its value in the future; gold does the same. The beauty of USD is that unless you think the United States of America is going to cease to be, it is the only thing accepted for tax payments and so a few hundred million people along with countless businesses and institutions are going to need USD to pay the government every year. Literally every stable currency is a "store of value"; the predictability of the value is what makes it stable. This is precisely why BTC is not stable, nor a good store of value. It is an asset whose primarily uses are speculation and illicit financial flows.
> Once something turns into a "store of value" it ceases to be a good medium of exchange.
I fail to see the connection. Sure, not all stores of value are good mediums of exchange, but this has more to do with the physical properties of the underlying commodity rather than the fact that it holds its value stably. Gold is too heavy to carry around in your pocket, and securely storing a lot of it requires specific infrastructure that most people don't want to maintain. These things are true regardless of whether or not the value of gold is relatively stable over time.
Since dropping gold standard, I've always seen it as faith in the US economy. There's no similar entity backing BTC.
all forms of money are worth something because people collectively agree that they are worth something and trade them for goods.
the USD is not special. BTC is not special.
People getting on their high horse about the USD and the faith in the US economy seem to forget that all things have a lifecycle and eventually everything goes away / is replaced. There is immense immediate pressure to keep the USD valuable and the thing that is used for international trade, but my guess is given 20-30 years a lot of things can happen.
If Bitcoin has no intrinsic value, how is that different than fiat? What gives the USD or British pound intrinsic value?
To the extent that any goods and services are for sale with prices in BTC, they are (in my experience) priced consistently with trading out of BTC into some currency (say USD) and then purchasing the product with proceeds of the sale.
The relevance of USD, and any currency, is a regional value.
And bitcoin is actually widely accepted here in Switzerland
Meanwhile BTC currently only serves as an abstraction over fiat currencies. It's practically only exchanged from and to fiat currencies, and that's not stable, as popularity is then the only mechanism dictating the price. BTC is much more like gold this way than the dollar.
I agree, which means both fiat currencies and Bitcoin have no intrinsic value, only what we collectively believe.
> BTC is more like gold this way than the dollar
agree
In 1933 $20USD would buy you 1oz of Gold. In 2021 it would take $2000USD to buy the same oz of gold.
It seems that the world’s reserve currency leaks approximately 99% of its value per century through the process of debasement which leads to inflation.
I would argue the world deserves a better store of value.
I am so confused by this argument.
I think you are right though that Bitcoin isn't acting like a currency, it is acting like an asset. Although it is highly speculative, more so that gold, as evidenced by its wild swings.
Bitcoin is a crypto-asset, not a crypto-currency.
I challenge the assumption that a currency is naturally inflationary in nature. Though it is very tempting to politicians to print money and debase the currency if they can get away with it, there is no inherent law of currencies that makes them inflationary. In fact, throughout hostory the only way fiat currencies could be inflated was through debasement. Bitcoin has a fixed supply and cannot be debased but those properties do not make it less of a currency.
> explains how this is very different
>> Launches a completely unrelated complaint about inflation which seems to serve mostly to highlight that BTC compares poorly to gold; the original answer is unacknowledged
It is held by other countries to pay their international debts, or to manipulate the exchange rate of their local currency.
First comment
That the hash rate has fallen so much means that coordinating a 51% attack is perfectly doable. Imagine that the missing hashing power was mining a parallel blockchain right now. We know it's not happening, but this proves that it's much easier to do than expected. These news essentially mean that the claims about bitcoin being completely safe from state attacks are vaporware.
China could have relatively easily done that previously but now it will probably be difficult for any one country to become that non-economic actor with both control of hash rate and the ability to coerce miners.
I find it so odd that many speak in phrases that suggest there is some global “west” vs. “east” whereas in reality it more so seems the case that there is more internal struggle within “the west” and “the east” respectively.
The Chinese in general seem to have a far higher opinion of, and feel less animosity to, say, the Danish, than they will the Japanese.
The terms “Western” and “Eastern” seem more than anything be based on race, not on actual cultural similarities. — Perhaps these existed a century back, but after the Chinese cultural revolution and the U.S.A. occupation of Japan, I do not believe Chinese culture to be closer to Japanese culture than Japanese culture to be U.S.A. culture.
If anything, the older division of communist vs. capitalist states made more sense. Though that difference too is shrinking with many officially communist states having incorporated a fair deal of free market, and many technically capitalist states having extensive government market direction into what is some call “social democracy”.
Miners aren’t throwing in the towel. They’re relocating.
China could have relatively easily done that previously but now it will be more difficult for any one country to become that non-economic actor with both control over hash rate and the ability to coerce miners.
Well, you gave the reason yourself why this is not that "easy" ...
Interestingly, it's the same reason why large cartels of several companies, ultimately, are doomed to fail to control the price of their product: In a cartel each member is incentivized to undermine the cartel's price to gain a profit. So usually cartels are effective only for a short time (and, yes, even the oil "cartel").
What you are proposing is a zero-fee fork of Bitcoin.
That's the problem, isn't it? Bitcoin "longs" are very unlikely to profit from a 51% attack, since its success would destroy the speculative value of the currency they hold.
On the other hand, increasing financialization of cryptocurrency allows people and institutions to build up short positions without directly holding bitcoin, and a 51% attack would cause those short positions to pay out. It may not even be illegal to do this, since there's no direct fraud in a 51% attack unless it's used to double-spend.
I wonder whether these two factors -- 51% resources and largest viable short positions -- still differ by an order of magnitude or two.
It is of course entirely possible the collateral held by the counter-party securing the borrow is seized in such a scenario (legitimately or not).
My gut feeling is that we aren't yet at the point that you could build an entirely on-exchange short position sufficient to fund a 51% attack, but that may change.
To estimate the cost of a 51% attack, miners currently get 6.25BTC/10 minutes at $35k/bitcoin, so the value of mining is about $32m/day. Rounding that up to even $50m/day to account for transaction fees, that's not very expensive if a hedge fund can build a $1bn short position.
The saving grace might be that you can't rent bitcoin mining hardware in unlimited quantities. A hedge fund might have to own the miners used for the attack, and if executing the attack causes bitcoin's value to drop to near-zero that would also devalue the mining hardware.
You could probably create a pool that grows rather fast if you simply pay more than others this would be possible by not generating any profit form the pool or worst case you could pay on top.
far more likely is a scenario where an existing pool owner or a few collude and pull this off as "exist scam". A crypto winter where the price of BTC drops below the mining cost would be the perfect situation. low hash rate. price of BTC down so not many people shorting and mining hardware cheap form all the miners who went bankrupt. Once a miner/pool has 51% it would eventually make financial sense to kill BTC for a final huge profit rather than slowly going bankrupt as well.
It might also be considered market manipulation to take out a short position on a bitcoin-linked fund or company (like Microstrategy) and then take actions with the intention of changing the price of Bitcoin. That could add enough legal risk to make a hedge fund think twice. I doubt a hedge fund could build a sufficient short position on unregulated DeFi networks, either, especially since blowing up Bitcoin would likely break the peg on at least Tether.
Still, this would seem to leave Bitcoin in an uncomfortable spot: the only reason the "free from government" currency continues to exist may be regulations by those selfsame governments.
It’s not about the holders, though. It’s about what the miners decide is best for them. Currently, higher BTC means more profits, but what happens if/when there are proposals to change BTC in ways that make it more eco-friendly? This is where we’d see miners flexing their power over the blockchain.
It’s also not hard to imagine scenarios where the chain forks for whatever reason and the miners go to war trying to discredit or destroy the other fork.
The risk associated with colluding for a 51% attack, the risk of financializing such a huge short position, and the near certainty of your capital investment becoming worthless all mean that this isn't a compelling proposition.
The minute someone comes up with a 51% attack that actually is in the financial interests of the miners, this becomes easy.
This is likely why it will be so difficult to ever move Bitcoin to a more economically friendly system: The miners will see any attempts coming and use their power to manipulate the system in the direction that benefits continued mining instead of more eco-friendly forks.
Bitcoin mining is a cash cow for a relatively small number of big players who have heavily invested in mining gear. They have no interest in letting this golden goose slip away.
this is almost verbatim from bitcoin whitepaper. more news a 11?
I hope this will continue steadily downwards.
This is very good for the Earth.
https://www.pcgamer.com/chinese-market-gpu-prices-drop-amid-...
The profits will last until new datacenters are set up outside of China. It's a slow process to do that, hashrate might not return to its peak value for 6+ months.
The increased profits will continue until everyone who was displaced from China can find a new home, but this isn't going to be a quick process, Bitcoin requires enough datacenter space that all the Bitcoin-ready datacenters outside of China are already full!
Its more of a problem security wise. There is now guaranteed hardware out there that can produce more than 50% of the hash power but its currently not "working" for bitcoin. This in theory could mean someone is secretly mining a longer chain which could later be made public and "reverse" the other chain.
This is very very unlikely to be the case because the "missing hashpower" is likely being moved to other locations and that is the reason why it is not running.
Miners have no interest in simply giving up on profitable mining gear.
Could someone with a better knowledge of cryptocurrency than me explain what a substantial drop in hashrate means or could mean? Thanks!
A good perspective video from CTO Larsson https://youtu.be/88V4JZr_x64
https://twitter.com/saifedean/status/1408346196490473476
And one from yesterday:
Given that the beacon chain has been running since December 2020 and people have locked in billions of $ worth of ETH, highly unlikely the switch will get delayed by long time now.
https://twitter.com/DocumentingBTC/status/140626608363237376...
The next Bitcoin difficulty adjustment will be happening soon and estimates indicate a change in 22-27% change. https://btc.com/stats/diff
The only way this would be really bad would be if it led to forced liquidation on the open market somehow. As long as China is happy if they move their machines and bitcoin and maybe their persons out of the country then I don't see how this changes much. Even if they start arresting people that doesn't directly lead to bitcoin being dumped. Now if the CCP confiscated many billions of $USD in bitcoin and then dumped them on the open market all at once just to nuke crypto because they were sick of it, that'd do it.
a better stagey would be to sell the hardware but make sure most of the units sold operate in a pool you control you can have multiple pools to make it not obvious. then attack with the pools so the lose in hardware value is not yours.
Would it be less than a carrier? Less than a submarine? More than an F-35?
https://braiins.com/blog/how-much-would-it-cost-to-51-attack...
It is given in dollars per hour. Compared to the cost of flying a F-35, a 51% attack would be like flying 20 F35s at the same time. Nothing too expensive for the military budget. It is just a squadron.
EDIT: The updated cost is here: https://www.crypto51.app/ With the new hashrate, that would be only 16 F-35s
...another 27%, down ~62% from peak, now...
Either way it is good for BTC as China will no longer be able to pull 51% attack.
Any major government, the PRC included, has it well within its power to repurpose existing computing hardware to launch a 51% attack on Bitcoin. They don’t, because why would they. What has changed is a small group of private individuals in China can no longer coördinate such an attack.
Specialised hardware is more efficient. It is not necessary. A combination of owned computing and purchased general-purpose cloud resources would do the trick, albeit sloppily and a bit more expensively than it would have been with specialist hardware.
Even if we factored in half the country having a GPU to add to the effort it would not be enough. If they wanted to do it they would have confiscated the mining equipment rather than have people send it abroad. Even manufacturing enough ASICs to mount a 51% attack would be difficult for a nation state to achieve. China's best bet was confiscating existing equipment and they pretty much prevented that by forcing it out of their country.
Because they don't want to. Because it's in nobody's interest to blow up Bitcoin. It's a money maker, a tax maker, and nobody has gotten too badly hurt yet.
I was responding to the assertion that China now can't disable Bitcoin. That's not true.
It would be great if for example Iceland which can produce surplus base-load renewable power without significant impact to its population.
Not for long https://kursiv.kz/en/news/rynki/2021-05/kazakhstan-plans-can...
'If the mountain will not come to Muhammad, then Muhammad must go to the mountain'
https://www.reuters.com/business/sustainable-business/oil-dr...
https://oilmanmagazine.com/how-and-why-natural-gas-flaring-i...
You know whats even better. FBA (Federated Byzantine Agreement) instead of PoW/PoS. And nodes all over the globe not just where electricity is cheap.
This drop is caused by miners moving from China to other countries.
Afterwards, it was just a hype and speculation object.
It was never suitable for transaction processing or value storage.
The nice thing of money in its current form is its relative stability. I can go out and buy or sell something without having to think about the value of the currency. This is not possible with bitcoin because the more it will be used its value will get higher due to the fact there are only so much bitcoins. So if it represents more value the value of the coin must go up
To make it usable for trading (shopping or otherwise) it must hold a relative stable value. But if it is stable it is no longer of interest for speculation. This will mean that speculators will move their money out of bitcoin and thus it will reduce value. rinse and repeat.
Bitcoin it self doesn't give interest or pays a diffident so the only way of making money is to ensure someone wan't to pay more for it than you did. It doesn't have any practical usability. You can't make a neckless from it, you can't use it in electronics. of course no currency gives you interest of diffident but due do the fact that that in a stable country the currency is stable it is an attractive intermediate. of course people make money with trading currency but that is done based on global economics and the state of the region or country that is responsible for the currency.
The reason why it is good to be able to print money is that if output rises and thus more value is created you can keep the value of the currency more or less the same.
The idea of having a none government run currency to make sure it is not manipulated is focusing on the symptoms and not focusing on the issue. the symptom is misuse of power the issue is not enough accountability of government (and thus banks etc).
Have people analyzed the bitcoin mining data and how they fluctuate compared to different random processes?
do you have any specific objection as to why bitcoin shouldn't be modeled in this way?
The more appropriate model might be negative binomial, because you want to know how many successes you get until a specified number of failures occur.
I don't doubt the Poisson distribution would model the data fairly well, but it's really hard to say that a real process is Poisson distributed by definition.