By design, it’s supposed to be barely profitable, so it makes sense it would cross that boundary once in a while. Then some miners stop, the difficulty is adjusted automatically, and it becomes profitable again. It’s actually a pretty interesting strategy.
Basically the difficulty depends on how many miners there are on the network. More miners = more difficult. Fewer miners = less difficult. The “difficulty” is just how “lucky” you have to be to hit a successful hash on a block. The block’s hash is based on the previous block + all the transactions you include in your block + a random number you add. If the hash ends in a certain number of zeroes, you have a successful block you can add to the chain, and you’re rewarded with some brand new coin in your wallet (you include that in the transactions in your block).
The amount of new coin constantly goes down as the chain gets longer, until it hits zero and mining doesn’t create new coin. Then, you would charge a fee for including someone’s transaction (a lot of miners already charge a fee). The more zeroes required at the end of the hash, the “harder” it is to mine. The network automatically adjusts how many zeroes are required to keep new blocks being added at a roughly constant rate.
So, fewer miners would mean blocks are being added too slowly at the current difficulty, and the network adjusts to make it easier to hit a successful hash.
bjorney@lemmy.ca 3 days ago
Bitcoin mining will always be profitable for the people with the cheapest electricity and largest economies of scale. There is a difficulty adjustment algorithm in the protocol that ensures this. When the price tanks people turn off thier miners, difficulty adjusts downwards, and then it takes less electricity to find a block.
tl;dr title is wrong
HubertManne@piefed.social 3 days ago
this is what im always trying to get people to understand. bitcoin is programmed to take more resources to artificially increase in value. its why its so horrible for the environment and why it could never really be used as a currency. Now other coins fix this issue but bitcoin tends to be popular because its fixed. Some even do useful work like gridcoin.
slacktoid@lemmy.ml 3 days ago
Libertarian economic theory failing in front of our very eyes
Hirom@beehaw.org 3 days ago
The headline isn’t accurate as usual, but isn’t completely wrong either. We’re at a point where it’s no longer profitable for individual minors, even if we ignore externalities like the cost we’re collectively paying due to mining pollution and carbon emissions.
Mining is require increasing amount of energy and resources as time pass, so unless there’s a radical change in bitcoin’s algorithm or unless energy becomes free, we should expect mining to get non-profitable in more and more situations.
bjorney@lemmy.ca 3 days ago
We have been at that point since GPU mining stopped being feasible in 2014, it’s just gotten worse. ASICs made it so the only people who could profit off mining were people who could place a wholesale sized order of hardware from bitmain, etc. Anyone else who claimed to be mining profitably was likely someone who was:
The algorithm already does this though. Every 2016 blocks if it took more than 10 minutes per block, the difficulty of mining bitcoin goes down, not up. This is why every halving event you see a radical drop in difficulty, because at a given kWh you are producing half as many bitcoin - meaning people turned off their miners because it’s less profitable. The flipside is the rate of issuance goes down, so there is a lower inflationary effect, and the price of Bitcoin usually also skyrockets (which means eventually these miners re-enter, and difficulty eventually goes back to where it was). It can never get to a point where Bitcoin mining is completely unprofitable unless the price goes to zero, because there will always be a guy with a solar panel and fully paid-off hardware who can mine it for free. Granted, it can get to a point where a lot of people have to take a huge loss on capital expenditures if the price nosedives and never recovers
Sibshops@lemm.ee 3 days ago
I don’t believe this is necessarily true. Miners like Riot Blockchain are operating at a loss and other people are stealing electricity.
bjorney@lemmy.ca 3 days ago
I’m not a finance wizard, but I peeked at their last SEC filing, and first 3 quarters of 2024 they posted a 35m operating loss, but added almost 900m worth of assets to their balance sheet (mostly Bitcoin), which to me tells a very different story
Vent@lemm.ee 3 days ago
There is nothing in the algorithm tied to BTC price. Sure, you’ll likely tend to get less miners as the price decreases, but that doesn’t guarantee that it’s profitable. Plenty of people, organizations, governments, etc do things that aren’t immediately profitable and may never be.