Hello all – I simply posted this over on r/Bitcoin, however hopefully can get some perception from right here too.
Apologies for the lengthy put up, however I am simply performing some thought experiments and this was certainly one of them. I haven’t got sufficient data concerning the mining facet of BTC to undergo with this, however my query is just about the title and I might wish to see what others suppose and hopefully some reasonings on why this is not a difficulty.
Under are some assumptions behind the reasoning of this thought. I perceive the probabilities are extremely low for all of these items occurring, however I am nonetheless curious to know and I feel it might be a great dialogue. I am additionally conscious of the issue adjustment, per level 4, however bear with me. So, I am assuming:
1. BTC value stays low/suppressed
2. Miners get priced out resulting from unprofitability
3. Lots (and I imply so much) of miners cease mining inside a short while horizon to forestall additional losses (i.e. a number of massive mining swimming pools cease mining)
4. A lot in order that there are far too many blocks till the following problem adjustment
5. Now there are a fraction of the miners left on the community tasked with fixing blocks, however the hash price has been lowered closely, leading to a disproportioned problem stage to hash price
6. Blocks are then solved extremely slowly and require a heavy quantity of power enter and price to unravel, nonetheless leading to a possible loss (even when we assume miners would obtain a better subsidy)
1. Mentioned one other manner, I am assuming that though much less miners could be entitled to extra of the block rewards (aka would make it extra worthwhile for them), this enhance in rewards is offset by the big enhance in price to unravel the block, eradicating any further profitability and maintaining them in a loss place
This then leads me to some query:
1. What the title is asking
2. Is the mining problem adjustment calculation weighted extra in the direction of the close to time period and would it not assist remedy this challenge (after slowly fixing the remaining blocks nicely above the specified common 10 minute blocktime)?
1. I might recognize any good assets on studying concerning the problem adjustment
3. Can one thing like this be mitigated?
4. Is it crucially essential for the typical block to be solved each 10 minutes? What occurs if turned one block per hour or worse than that?
1. I’d suppose that is essential because it helps protect the safety of the community and to maintain the prices to assault the community excessive through double spending or making an extended manipulated chain
That is the extent of my ideas and questions. I am no professional (most likely clear to a few of you haha), however needed to ask anyway. Thanks!
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>Miners get priced out due to unprofitability
Difficulty dynamically adjusts both ways to insure efficient miners always remain profitable. Keep in mind that miners have sunk costs in rent/infrastructure and energy thus they often just keep mining regardless of temporarily being unprofitable until difficulty re-adjusts
There is nothing new about inefficient miners going out of business , and better miners buying their ASICs on the cheap and running more efficiently
Despite this bear market hash rates are at all time highs because of this.
>A lot (and I mean a lot) of miners stop mining within a short time horizon to prevent further losses
Why do you think that hashrate remains at all time highs than ?
>So much so that there are far too many blocks until the next difficulty adjustment
It is fine… Bitcoin difficulty just changed yesterday .
>Now there are a fraction of the miners left on the network tasked with solving blocks
This is untrue. Mining is more diversified and hashrate is at all time highs
Simple answer…as “unprofitable” miners go offline, “profitable” miners come online. There will never be a point where mining is completely unprofitable by all miners.
>Blocks are then solved incredibly slowly and require a heavy amount of energy input and cost to solve, still resulting in a potential loss
Other miners can become more profitable when unprofitable miners stop mining **even before difficulty re-adjusts** because there are more fees to collect as the mempool builds up and they are finding a greater % of the blocks
>this increase in rewards is offset by the large increase in cost to solve the block,
This is incorrect, there is no increase in cost to solve a block
>Is the mining difficulty adjustment calculation weighted more towards the near term and would it help solve this issue
You are assuming a problem that doesn’t exist because miners have long term time preferences and aren’t living “paycheck to paycheck”
every ~2 week period
Reducing the difficulty readjustment window like we have seen from certain altcoins with very similar codebase as bitcoin has led to certain attacks as well where large centralized miners could quickly mine more inflation ahead of schedule as well
>appreciate any good resources on learning about the difficulty adjustment
https://en.bitcoin.it/wiki/Difficulty
https://www.lopp.net/bitcoin-information/mining.html
>Can something like this be mitigated?
Please present a problem that exists . Your fears thus far have never been an issue for bitcoin
>Is it crucially important for the average block to be solved every 10 minutes?
The block target is 10 minutes, but due to the Poisson process blocks can be found in seconds to hours and this is completely normal.
Assume a hashrate and difficulty corresponding to 1 block per 10 minutes. If I uniformly randomly pick a point in time, what is the expected time between the previous block and the next block?
Answer is **20 minutes**
Proof – http://r6.ca/blog/20180225T160548Z.html
More info –
https://arxiv.org/pdf/1801.07447.pdf
>What happens if became one block per hour or worse than that?
This has happened many times before. Its no big deal , especially now because most txs occur offchain or on different layers so you do not need to wait for a confirmation
As a practical example: In June 2021, more than 40% of mining hash rate went rapidly offline due to a crackdown in China. The network kept going just fine. Block times were longer than a 10 minute average (inconvenient for users but not a big deal really) until the difficulty adjustment kicked in.
In a hypothetical extreme scenario (where something like 99% of miners go offline and the remaining blocks until the next difficulty adjustment are impracticable to mine), the network can be forked to a lower difficulty to keep it running. The system is just code and code can be changed. We just need to agree on the change.
The solution is making btc mining accessible to the everyone, I saw somewhere a heater that also mine btc
For any miner, there are essentially 2 break even points in a bear market:
1. The point where it becomes uneconomical to buy new hardware, but where it’s still economical to leave existing hardware running. Operational costs are less than income, but the profit is insufficient to cover depreciation/replacement of hardware.
2. The point where it becomes uneconomical to even run existing machines. When operational costs (mostly power) have outpaced income.
The price would have to crater significantly for scenario 2 to occur for most miners. Keep in mind that mining hardware doesn’t appear out of thin air when the price goes up and at the peak of the latest bull run, the cost of mining was still far below the income as miners were scrambling to add more hardware as quickly as possible. That means there was a lot of leeway for the price to decline before profitability was threatened.
So we could end up in a situation where miners keep their devices running, but don’t expand operations or replace defective hardware. In this scenario, the hashrate will decline gradually as older hardware breaks down and is not replaced.
Note that the break even points aren’t the same for everyone. Older hardware is less efficient and will more rapidly reach a point where it’s better to just turn it off than newer hardware. And power costs will vary depending on where the miner is located. So it’s unlikely that a large group of miners will stop operations at the same time. The least profitable miners will quit first. And this will lower the difficulty and slow or stop the decline in profitability, allowing the remaining miners to stay online.
> Is the mining difficulty adjustment calculation weighted more towards the near term and would it help solve this issue (after slowly solving the remaining blocks well above the desired average 10 minute blocktime)?
The difficulty is updated every 2016 blocks. At this point, the time that was spent to mine these 2016 blocks is calculated and compared with the target time to mine 2016 blocks at 10 minutes per block (2 weeks). The difficulty is then adjusted to such a value that if the hash rate remains the same as it was on average for the past 2016 blocks, the next batch will take exactly 2 weeks.
So if the hashrate changes at the start of such a cycle and then remains constant, then the next adjustment will immediately put the difficulty back to having a 2 week cycle. If the hashrate drops or jumps somewhere in the middle of the cycle, then the adjustment will not fully take it into account and the difficulty won’t fully reflect the new hashrate for the next cycle.
> Is it crucially important for the average block to be solved every 10 minutes? What happens if became one block per hour or worse than that?
Not at all. This happens all the time, since mining is a luck-based process (Poisson process). The time between blocks can be less than a minute or more than an hour and if you scroll through the blocks on a block explorer website, you’ll find ample examples of both cases.
The difficulty mechanism aims for an average block time of 10 minutes. Or said differently: 2016 blocks every 2 weeks. But large fluctuations on a block-by-block basis are part of the nature of the beast.
As others have indicated, the Chinese mining ban was an example of a sudden and large drop in hashrate and will probably not be easily matched in intensity by hashrate changes due to price action. And the impacts of the China ban were absorbed quite well. Blocks came in a bit more slowly for a period, but then the network adjusted and carried on unfazed.
If you’re worried, here’s a fun little website that lets you see time between blocks (among other things) https://tradeblock.com/bitcoin