From: Tier Nolan <tier.nolan@gmail•com>
Cc: Bitcoin Dev <bitcoin-dev@lists•linuxfoundation.org>
Subject: Re: [bitcoin-dev] Hardfork to fix difficulty drop algorithm
Date: Wed, 2 Mar 2016 18:07:41 +0000 [thread overview]
Message-ID: <CAE-z3OWA0sn+=+qqs8BtiBe7T9Qdb4G8XAS_bX4hScq225iZQQ@mail.gmail.com> (raw)
In-Reply-To: <56D71488.4080607@gmail.com>
[-- Attachment #1: Type: text/plain, Size: 1429 bytes --]
On Wed, Mar 2, 2016 at 4:27 PM, Paul Sztorc via bitcoin-dev <
bitcoin-dev@lists•linuxfoundation.org> wrote:
> For example, it is theoretically possible that 100% of miners (not 50%
> or 10%) will shut off their hardware. This is because it is revenue
> which ~halves, not profit.
It depends on how much is sunk costs and how much is marginal costs too.
If hashing costs are 50% capital and 50% marginal, then the entire network
will be able to absorb a 50% drop in subsidy.
50% capital costs means that the cost of the loan to buy the hardware
represents half the cost.
Assume that for every $100 of income, you have to pay $49 for the loan and
$49 for electricity giving 2% profit. If the subsidy halves, then you only
get $50 of income, so lose $48.
But if the bank repossesses the operation, they might as well keep things
running for the $1 in marginal profit (or sell on the hardware to someone
who will keep using it).
Since this drop in revenue is well known in advance, businesses will spend
less on capital. That means that there should be less mining hardware than
otherwise.
A 6 month investment with 3 months on the high subsidy and 3 months on low
subsidy would not be made if it only generated a small profit for the first
3 and then massive losses for the 2nd period of 3 months. For it to be
made, there needs to be large profit during the first period to compensate
for the losses in the 2nd period.
[-- Attachment #2: Type: text/html, Size: 1874 bytes --]
next prev parent reply other threads:[~2016-03-02 18:07 UTC|newest]
Thread overview: 31+ messages / expand[flat|nested] mbox.gz Atom feed top
2016-03-02 14:56 Luke Dashjr
2016-03-02 15:05 ` Pavel Janík
2016-03-02 15:14 ` Luke Dashjr
2016-03-02 15:24 ` Jérémie Dubois-Lacoste
[not found] ` <CAE-z3OUR8So2EM_EBeEerW-UPs0KY+whVB=jjFAHkW3xZPF2Hw@mail.gmail.com>
2016-03-02 15:54 ` Tier Nolan
2016-03-02 15:42 ` Luke Dashjr
2016-03-02 16:27 ` Paul Sztorc
2016-03-02 18:07 ` Tier Nolan [this message]
2016-03-02 19:01 ` Eric Voskuil
[not found] ` <56D74859.3090609@gmail.com>
2016-03-02 20:44 ` Eric Voskuil
2016-03-02 23:02 ` Peter Todd
2016-03-03 5:11 ` Dave Scotese
2016-03-03 10:14 ` Patrick Shirkey
2016-03-03 20:54 ` Eric Voskuil
2016-03-04 10:27 ` Tier Nolan
2016-03-02 15:48 ` Dave Hudson
2016-03-08 22:05 ` Bob McElrath
2016-03-09 18:30 ` Dave Hudson
2016-03-09 20:21 ` Bob McElrath
2016-03-09 23:24 ` Dave Hudson
2016-03-09 20:26 ` Paul Sztorc
2016-03-02 16:17 ` Bryan Bishop
2016-03-02 17:14 ` David A. Harding
2016-03-02 17:53 ` Gregory Maxwell
2016-03-02 19:34 ` David A. Harding
2016-03-03 1:06 ` Paul Sztorc
2016-03-09 17:58 ` Paul Sztorc
2016-03-02 18:20 ` Peter Todd
2016-03-03 18:27 ` Corey Haddad
2016-03-04 8:41 ` Henning Kopp
[not found] ` <CA+XQW1gfnXxxCod6cL=caGnEc66YOvaF6SJL=omUbMqwLNDP7g@mail.gmail.com>
2016-03-09 20:43 ` Paul Sztorc
Reply instructions:
You may reply publicly to this message via plain-text email
using any one of the following methods:
* Save the following mbox file, import it into your mail client,
and reply-to-all from there: mbox
Avoid top-posting and favor interleaved quoting:
https://en.wikipedia.org/wiki/Posting_style#Interleaved_style
* Reply using the --to, --cc, and --in-reply-to
switches of git-send-email(1):
git send-email \
--in-reply-to='CAE-z3OWA0sn+=+qqs8BtiBe7T9Qdb4G8XAS_bX4hScq225iZQQ@mail.gmail.com' \
--to=tier.nolan@gmail$(echo .)com \
--cc=bitcoin-dev@lists$(echo .)linuxfoundation.org \
/path/to/YOUR_REPLY
https://kernel.org/pub/software/scm/git/docs/git-send-email.html
Be sure your reply has a Subject: header at the top and a blank line
before the message body.
This is a public inbox, see mirroring instructions
for how to clone and mirror all data and code used for this inbox