142. Why Bitcoin Miners Get Rekt

Why are so many bitcoin miners going bankrupt? We discuss the economics of bitcoin mining, how the difficulty adjustment works, why it makes bitcoin mining a zero sum game, and why it ensures bitcoin is optimized for the saver, not for the miner. Plus, what are the things you need to keep in mind if you are considering getting into mining?
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[@gary4507]

Cost of electricity is key to surviving in Bitcoin mining. CleanSpark is doing a good job of it by using long--term power purchasing agreements,mostly nuclear,and operating with virtually no debt.

[@brokeminer475]

Been mining for years. Sometimes at a small loss. I buy equipment at bottom of bear markets. This is the first time machine prices haven’t totally collapsed. Still getting 2gs for S19j pro and thats old tech. New stuff (S19XP) is still $5500 and that’s way high yet. Don’t think enough big farms have failed yet because their equipment isn’t on market.

[@hoos.crypto]

Thanks for posting this Saifedean, shared with the gang!

[@joerogers11155]

Stay humble, stack sats. Peace and love. Keekee!!

[@kennedylucas4833]

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[@kennedylucas4833]

She's active/available on

[@kennedylucas4833]

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[@kennedylucas4833]

+1

[@kennedylucas4833]

74040

[@kennedylucas4833]

20880

[@digital_gravity]

This channel is criminally undersubscribed.

[@studioonmaindance]

So good! Thank you thank you

[@ericpowell4350]

Great info

[@io3213]

I keep wondering whether an old ASIC could survive as a household item in a densely populated areas if, like I suspect, it isn't an energy efficient heater, in addition to being an inefficient miner. I guess it comes down to either having relatively cheap electricity prices whether from the grid or self-produced, or there being a shortage of efficient electric heaters.

[@yawzerdoink-a-sore-as8159]

20% benefit while 80% do the work

[@Gismotronics]

Where in the world can you get electricity at $0.03 per Kw/h reliably? I did a quick search and it seems to me that the countries offering the cheapest electricity have the most blackouts or it's just not a country to do business in.

[@LibertyLuminary]

If mining becomes too cost prohibitive, then doesn’t that spell trouble for the future of the Bitcoin blockchain? If there is zero incentive to mine, then at some point transactions come to a halt, and nothing moves. No mining = no BTC. If everybody took the position of “don’t mine, just buy/stack,” then no one could buy if nobody was left mining. Is this possibly a very serious risk that could undermine (no pun intended) the long term viability of the BTC value proposition altogether? Am I missing something?

[@gianf3952]

Yup. You missed no one mining, difficulty goes down, I could mine with my laptop.

[@reallyshel]

There is always an incentive to mine. Due to mining difficulty adjustment.

[@s-tawa4298]

Does coinbits work for users in EU?

[@waynerichardson1051]

Thanks mate, really appreciate your time! Excellent information again!! You're my go to guy for straight up no bullshit Bitcoin content! Cheers

[@2ferone86]

As the mining subsidy continues to decrease and *(IF) the value of bitcoin doesn't increase enough to cover the difference, will the cost of on chain transactions increase? 7 tps + fewer block rewards + less price appreciation =?

[@2ferone86]

@@hakael2572 Yes I think that's basically how it works. I was just trying to make a point by asking a rhetorical question. 👍

[@thomast3232]

Sorry for the nooby question but if almost nobody should mine, as it is always better to just stack sats, how are we sure that there will be people to mine bitcoin in the long term ?

[@cbboegh]

With no miners, is it then even possible to add to the chain? Can bitcoin even be a medium of exchange in the long term?

[@SteamalbRushu]

Because as soon as ppl stop mining, it becomes profitable again thx to the difficulty adjustement. It's a constant self regulating balance.

[@pepelapiu2004]

As long as there is moneynto be made, there will be miners. Every 10 minutes or so, a new block gets mined. And the miner who mines this new block gets the block reward, currently at 3.25 BTC. That is 60k USD of BTC every 10 minutes. And that dies not include the miner fees paid by people who send transactions. What they are basically saying here is that only those with access to the best conditions (electricity, climate, local legislations) will be able to turn up with a profit.

[@TheRealJennifla]

DCAing= dollar cost averaging. KYC=know your customer (for the noobs)

[@moisturisedgnome1181]

Challenge. Take a shot every time he says "rekt".

[@larusargentatus8357]

Anyone know if Genesis Mining is OK..?

[@codycast]

4:00 video finally starts.

[@dominicjodoin7756]

is HIVE Blockchain Technologies a good miner

[@DanielJones117]

It seems like Mining was conceptualized as the big draw in for big money/resources to get into Bitcoin. Hate I didn't put more effort into understanding and trying to mine on the computers I did have available back in 2009-2013

[@DanielJones117]

@14:50 oh NVM.

[@gandolfgrey5385]

It's all about when you buy equipment if you buy in the bear market you can ROI before the next halving and this will continue to work for small miners until the network fees equals the block rewards. Unfortunately this guy has not actually been in the mining scene and has not done enough research on this. Maybe this guy should listen to people who actually mine.

[@jybevox]

Can we say that «gold» was distributed randomly on earth, and that «bitcoins» are also «metaphorically» distributed randomly on earth, around the spot of cheap electricity. Those spots are the places where the bitcoins are «located» in the real world :)

[@joan3891]

Mining is not for the faint of heart, that’s for sure.

[@ggrthemostgodless8713]

So basically mining will get more and more CENTRALIZED and that goes against the main idea of bitcoin decentralization!!

[@hanshazlitt4535]

Nobody mentions that a large percentage of the hash rate comes from devices infected with malware.

[@huxley49620]

All the machines can do is hash

[@theguy9067]

From what I am gathering, it isn't really instilling a lot of confidence in bitcoins future in terms of sustainability. In the next half rewards will half, if bitcoin price doesn't increase, mining might stop. If miners stop mining, bitcoin doesn't function. The whole thing seems to be becoming fragile

[@io3213]

Mining difficulty would simply adjusts downward to the lower hashrate, lowering costs and eventually making it profitable again.

[@jinko47]

Why is solar mining bad? I understand going into debt to do it is probably a bad move, but on it's own I don't see the issue.

[@chrisbryden8102]

Your completely wrong on miners not getting centralized. The cheapest energy period is going to be king. Country’s like Russia with endless natural gas could absolutely crush the market on electricity cost.

[@allroadsleadtobitcoin]

It's like looking in a mirror.

[@Kitsune101]

I feel like the analysis here is contradictory. Somehow he when from you cant profitably mine BTC unless you have cheap energy to that equal more decentralization. Aint it the opposite? The ppl that monopolize energy are the only ones that can get cheap energy and this will create more centralization not less. At some point only energy rich countries will be able to mine BTC because they are the only ones that can get cheap energy.

[@carly09et]

The price/cost of mining is synthetic the hash cost is arbitrary depending on how the space is restricted, no restriction == trivial cost. The restriction makes the cost == > 30% of bitcoin price, mining is a limited 'lottery'. More miners is just more 'tickets' in the same lottery pool.

[@faraanjom1103]

When you talk about bitcoin sounds like genius , keep shining bro . When you talk about global warming sounds very uneducated tho

[@michealbrisbane3206]

I love the grounded reality of this channel... TA is all well and good but I find it truly baffling that all major crypto youtubers just look at pure TA and completely ignore the bigger narrative of why BTC is pumping and why the future outlook might not be as rosy as it seems. It's kinda irresponsible to ignore the fact that each ETF launch so far has caused a major dump at the peaks of BTC. We were already on shaky footing with historically low volume and almost pure whale pumps, narrowly avoiding a long-term bear market.This is the worst possible time in history to invest as so many don't back up their crypto assets.More emphasis should be put into day tradiing as it is less affected by the unpredictable nature of the market.I have made over 1.8btc from day tradng with Peter Donovan insights and signals in less than 2 weeks, this is one of the best medium to backup your assets incase it goes bearish.

[@MultiHinrik]

If many of the big miners shut down does that mean it will bring the hash rate down and security with it?

[@reallyshel]

Brings down the mining difficulty

[@MultiHinrik]

@@reallyshel yes but at the same time it would make the network less secure and easiert to attach right?

[@reallyshel]

@@MultiHinrik nope, would just mean more individuals could mine cheap.

[@MultiHinrik]

@@reallyshel so security is not affected by a lower hash rate? Would a lower hash rate not make a 50 50 attack more likely?

[@rpreto72]

Saifedean, according to your definition, are poor people parasitic?

[@paulheydarian1281]

Probably...!!!😏😉 It's very easy to demonize and or belittle others. Especially, if you pick on a group that can't or won't fight back.

[@ashdraked]

Poor is too broad some are good people some are not, bureaucrats however are all parasitic