You mean getting paid for using energy is not a working business model? Was about time that the market found that out
Bitcoin mining is no longer profitable
Submitted 3 weeks ago by Hirom@beehaw.org to technology@beehaw.org
https://www.pcworld.com/article/2767705/bitcoin-mining-is-no-longer-profitable.html
Comments
marius@feddit.org 3 weeks ago
henfredemars@infosec.pub 3 weeks ago
Turns out the giant earth heater wasn’t the best business concept.
technocrit@lemmy.dbzer0.com 3 weeks ago
You mean getting paid for using energy is not a working business model?
It’s literally every business model.
Hirom@beehaw.org 3 weeks ago
Given the current price of bitcoin, I suspect the marking still doesn’t know.
Midnitte@beehaw.org 3 weeks ago
Mostly due to the fact that mining bitcoin becomes harder as more and more are found, and the “worth” of that work no longer exceeds the cost in electricity to do so.
In the past, it was basically free money, especially with how volatile it’s value is/was
GregorGizeh@lemmy.zip 3 weeks ago
To this day, I have not understood what exactly is even being calculated, and for what real world application. I mean, I understand mostly what crypto is and how it works, but not why doing those calculations results in financial gain.
hperrin@lemmy.ca 3 weeks ago
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.
Hirom@beehaw.org 3 weeks ago
Thanks for the refresher. I’m aware of the basics, but assumed the difficulty measured by the number of zeros could only increase. Apparently difficulty can decrease, and I’ve read it’s expected to decrease very soon to keep the system running a while longer.
Bitcoin’s creator was smart enough to design a system that automatically adjust to remain profitable for several years without intervention, but not smart enough to foresee social and environmental costs.
It’s a good example that illustrate why automated systems shouldn’t be left running unsupervised, even if it’s designed by the best of minds with the best of intentions.
The_Caretaker@lemm.ee 3 weeks ago
There are other methods of operating a blockchain, besides proof of work, which are much more energy efficient. Think of Bitcoin being like a coal fired power-plant and some other cryptos based on proof of stake being akin to solar panels.
locuester@lemmy.zip 3 weeks ago
It’s a good example that illustrate why automated systems shouldn’t be left running unsupervised, even if it’s designed by the best minds with the best of intentions.
The network is constantly supervised and mining is a competitive business. The network was built to adjust, and is working precisely as intended.
Oka@sopuli.xyz 3 weeks ago
Wouldn’t it be easier if a bunch of people paid a dollar every second, and one of those people was randomly selected to get every dollar submitted?
FiskFisk33@startrek.website 3 weeks ago
it would, but the act of giving a dollar doesn’t double as a way to validate transactions
humanspiral@lemmy.ca 3 weeks ago
Also a clue from one of the links is that “German industrial rate customers, cost is $200k/btc”. Their industrial rate is $0.25/kwh, and so then their claim is based on 12c/kwh utility rates. Utility rates has pretty much always been cost prohibitive. Wholesales and behind the meter power is certainly an advantage large scale mining uses.
kittenzrulz123@lemmy.blahaj.zone 3 weeks ago
kittenroar@beehaw.org 3 weeks ago
bitcoin mining hasn’t been profitable for a long time.
Boomkop3@reddthat.com 3 weeks ago
…but you could buy specialized hardware for it
kittenroar@beehaw.org 3 weeks ago
True, but the outlay of cost for the hardware was higher than the value of Bitcoin you would receive.
mctoasterson@reddthat.com 3 weeks ago
It remains profitable for scammers who use malware botnets consisting of other peoples computing power and electricity.
psx_crab@lemmy.zip 3 weeks ago
Not if you outright steal the electricity.
comfy@lemmy.ml 3 weeks ago
I remember a thread where someone had put a mining rig inside a hotel or apartment’s cleaning room and was running it off the stolen electricity.
some_guy@lemmy.sdf.org 3 weeks ago
Finally.
DragonTypeWyvern@midwest.social 3 weeks ago
It’s actually been that way for years outside of places with subsidized/corrupt pricing.
bjorney@lemmy.ca 3 weeks 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 weeks 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 weeks ago
Libertarian economic theory failing in front of our very eyes
Hirom@beehaw.org 3 weeks 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 weeks 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 weeks 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 weeks 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 weeks 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.