Bitcoin Miners Bail, While Cryptocurrency Capitalization Drops 83% Since January (coindesk.com) 148
"Bitcoin miners hit hard by the cryptocurrency's crash may be throwing in the towel," reports Bloomberg:
The Bitcoin network's hash rate, one way of gauging the computing power dedicated to mining the digital currency, dropped about 24 percent from an all-time high at the end of August through Nov. 24, according to Blockchain.com. While the decline may have partially resulted from miners switching to other cryptocurrencies, JPMorgan Chase & Co. says some in the industry are losing money after Bitcoin's price tumbled. "This suggests that prices have declined to a point where mining is becoming uneconomical for some," JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a Nov. 23 report, in reference to the falling hash rate...
The break-even cost to mine a single Bitcoin using Bitmain's Antminer S9 rig was estimated at $7,000 in a Nov. 16 report by Fundstrat Global Advisors, though the level is probably lower for some miners with access to cheap electricity and equipment... A big miner shakeout could be bad news for chipmakers including Taiwan Semiconductor Manufacturing Co. and Nvidia Corp. who supply the industry, along with mining-rig designers like Bitmain Technologies Ltd. that are pursuing initial public offerings.
The price of bitcoin dropped 37.4% just in the month of November -- its worst monthly decline in seven years, since August 2011 when it fell from roughly $8 to $4.80. And the decline in bitcoin also dragged down 24 of the top 25 largest cryptocurrencies, reports CoinDesk. "What's more, the average performance of the top 10 cryptocurrencies by market capitalization was -30 percent, while the average performance of all 25 was -37 percent..."
"The total capitalization of the cryptocurrency market has now lost over $690 billion and 83 percent of its value since reaching its all time high north of $820 billion this past January, according to CoinMarketCap."
The break-even cost to mine a single Bitcoin using Bitmain's Antminer S9 rig was estimated at $7,000 in a Nov. 16 report by Fundstrat Global Advisors, though the level is probably lower for some miners with access to cheap electricity and equipment... A big miner shakeout could be bad news for chipmakers including Taiwan Semiconductor Manufacturing Co. and Nvidia Corp. who supply the industry, along with mining-rig designers like Bitmain Technologies Ltd. that are pursuing initial public offerings.
The price of bitcoin dropped 37.4% just in the month of November -- its worst monthly decline in seven years, since August 2011 when it fell from roughly $8 to $4.80. And the decline in bitcoin also dragged down 24 of the top 25 largest cryptocurrencies, reports CoinDesk. "What's more, the average performance of the top 10 cryptocurrencies by market capitalization was -30 percent, while the average performance of all 25 was -37 percent..."
"The total capitalization of the cryptocurrency market has now lost over $690 billion and 83 percent of its value since reaching its all time high north of $820 billion this past January, according to CoinMarketCap."
Ha ha (Score:2, Insightful)
Ha ha
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Homer: Looks like I HODL'd my Nelson Coin a bit too long.
Snake: I'm transferring Homer's coins to Mexico.
C. Montgomery Burns: Eeeeeexcellent.
It will come back (Score:4, Funny)
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I remember using Flooz to buy buggy whips and a new tin of Uncle Earl's Mustache Wax.
Re:It will come back (Score:4, Funny)
Re:It will come back (Score:4, Funny)
Wait...they shutdown? I have a lot of Flooz still. No one told me they shut down.
The A/C is lying to you. He's just trying to trick you into giving him your Flooz for nothing.
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I read some survey somewhere that suggested a lot of people getting into bitcoin knew it was a bubble - they were just hoping to ride it up.
I personally believed it had hit its peak when it had "gone exponential" and my barber was talking excitedly about bitcoin prices. This is sometimes called the shoeshine boy indicator. And indeed the price started tanking within a couple weeks.
Who knows, it could climb again and surpass its previous peak... but I think it won't because it's run out of mugs to hold the b
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The 'shoeshine boy indicator' is a pretty reliable tell for when an investment mania is reaching exponential bubble status.
Look not just at Bitcoin, but at all the other cryptocurrencies (over 900 of them last time I checked!) that have been launched for people who think they missed the boat on Bitcoin when it was selling so high a year or so back. The crash will start on these 'alt-coins' first. We will find that a lot of people effectively borrowed against Bitcoin positions to "invest" in alt-coins. When
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I had the same experience with my Van Dyke style beard. When 4/4 Postal Clerks at my local Post Office had Van Dykes (one of them is a woman) I knew it wasn't hip anymore.
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And the article references nvidia as taking a hit in this one, which is equally ignorant, as ethereum ASICs pushed GPU mining out completely a few months ago. It's why nvidia and its board partners are reported to have large warehouses full of unsold GTX 1060s, which were the most economical card to mine ethereum on before ASIC hit the market.
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...realise that anti-science part of green movement is quite awful, and maybe even learn enough basic human courtesy to apologise for being an asshole in addition to being wrong on basic facts.
Until then, I fully expect you to spout your inane anti-science dogma as AC. Break a leg.
I'm a leading critic of this effect myself, but since we have only just started to identify microplastics in the human body the science isn't in yet on what effect it might be having in there. Is it dissolving? What might it be releasing? We can't assume it's harmless.
It's just like energy or climate: let science characterize the problem, and then stand aside and let engineers fix it.
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I didn't say we know the effect to be harmless. I said that as far as we know right now, they're harmless. Which if you understand the scientific method, is literally the best that can be said about anything. We can never prove something to the fullest extent, we can merely state that as far as the best effort attempts to find out found out, it appears to be harmless. The original study that found the microplastics in human bodies stated that they were observed to be chemically inert and mechanically too sm
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First part of the last sentence is the one part you got right. Let's hope that you eventually realise that green dogma is anti-science sooner rather than later.
Of course, judging by the way you use language, your mental age is young enough that you can be forgiven for being an ignorant and opinionated twat. Just don't get old while retaining that kind of behaviour. What is forgivable at 20 is met with very harsh reaction at 40.
Why Bitcoin has a maximum Flux (Score:5, Interesting)
Not all Cryptocurrencies are doomed, but All cryptocurrencies based on "proof of work" are doomed. Here's the analysis.
The sole purpose of proof of work is to make a double-spend impossible in a distributed (no centralized authority) system. In a distributed system, multiple ledgers might exist so the rule is the longest blockchain ledger trumps any other. With this rule the only way a cheater can spend a coin, get the benefit of the transaction, then after the fact erase the expenditure from the transaction is if they can using their own CPU power extend the pre-spend ledger faster than the post-spend ledger is being chained by the collective cpu power of the community. This is often dubbed the 51% attack. In real life it take more than 51% or a dose of good luck to make it work, but 51% is a good name for it.
No DISTRIBUTED cryptocurrency can exist if it does not solve the double spend problem. Many use proof of work.
How does proof of work do this? Well it doesn't work if the cost of getting 51% of the collective CPU power is less than the profit you can make by re-writing the ledger successfully.
Proof-of-work therefore has to adaptively adjust the cost of doing that so that the amount of money being transacted is always less than the cost someone wold incur for confidently performing a 51% attack.
You can imagine a lot of ways of doing that adaptation, bit coin has an approximate one built into it's growth rate and hash rate.
How good the approximation is, is less important than the bottom line: No cryptocurrency can survive long term if it is vulnerable to a 51% attack, and so the proof of work cost must grow with the transaction volume.
This means the costs of operating any system based on that principle is doomed to collapse in heat death as it grows beyond practical size.
If you want to have a viable cryptocurrency, then you need to come up with some clever system that impairs the double spend problem without proof of work. Alternatively you need to rig things so that the 51% attack does not scale lineary with the number of CPUs you have. (this might be rule based such as voting cheaters off the island, but that particular solutions isn't it because it just moves the problem somewhere else not solving it)
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Any paper currency that you could perfectly counterfeit would quickly fail.
The British pound notes of WW2 suggests otherwise. The British government recalled and replaced notes. Sure it hurt, and the pound was devalued on the continent, but it survived.
https://insh.world/history/how... [insh.world]
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please explain what SSL has to do with this. I am mystified, and curious.
Re: Why Bitcoin has a maximum Flux (Score:4, Informative)
I disagree. While it may use public key signatures it's a lot more sophisticated than that. There are several key difference. Among these is the actual storing of value in the signed transactions as opposed to a signed transaction referencing an external contract.
Let me give an example. If you and I wanted to sign a contract, I could sign the contract in the usual SSL method of signing a contract that is provably linked to my private key. To be specific, it is provable that the person behind a specific public key is the only person who could have signed it (assuming their private key is private).
That contract might say I promise to pay you $100.
But that doesn't mean I actually have paid you $100. It just means I promised to do it. Now perhaps you could take that promise to a third party like my bank and treat it as a demand note (i.e. like a check). But the actual transfer of wealth isn't assured just by that signature. It takes something else to make it real.
With bitcoin, the memo itself actually transfers the bitcoin! If I say I am doing it, I actually just did it.
What makes bitcoin clever is that it figured out a way to store wealth in the bits. A way you could actually deposit real money into the system to make electronic transactions real money transactions.
It's quite a bit more sophisticated than SSL. But you are right that public/private keys are required. But they are not the "magic".
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They write the diatribes about how "peak oil" is right around the corner and everything is going to collapse (for the last 50 years).
Given that there is a finite amount of oil on the planet, and that oil is effectively destroyed as it is used, they will sooner or later be correct.
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My plot for a future Bond/Heist movie (Score:5, Funny)
Between cat grooming session, Ernst Stavro Blofeld arranges to take delivery of all the diamonds in the DeBeers vaults after paying in bitcoin. As his trucks drive off with the purchased diamonds, an unexplained nationwide power failure ripples across china. It only lasts ten minutes. And then power is restored. It is traced to a faulty decision at a load balancing station that drove the grid to instability and causing every power plant to take itself off line to protect itself. While the power is down, 99% of all the bitcoin miners are offline. It's impractical to use UPSs for bitcoin mining since they are so power intensive. Worse, most miners outside china were getting their blockchain publications to and from nodes in china so they are effectively shut out of the chain extension process too. Meanwhile Blofeld contracted with AWS for a relatively modest amount of surge CPU power to re-write the ledger are 0.01% of the cost. And somehow Debeers never received payment at all.
Blofeld can then both crash the economies of nations, buy islands for missile launching, destabilize the value of diamonds leading to the destruction of marriage, and dress his cat in a diamond Liberace outfit.
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Hey, it's a Bond movie. Do you really think 007 has a cutting laser in his watch too?
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I don't think your argument is a very good one because most currencies fail eventually. If you got Roman coins that were once backed by the mightiest empire on Earth they're not usable as currency today, but they functioned for a while. If Bitcoin flops and dies because the blockchain is abandoned or becomes chaos, well it functioned for a while. If you bake in the risk premium of the occasional catastrophic failure it's just a cost of doing business. For example drug smugglers know that 100% of the drugs
Re: Why Bitcoin has a maximum Flux (Score:1)
Gold Roman coins have pretty much preserved their value. A gold coin was worth a fair amount to a Roman who likely lived on what we refer to now as "a dollar a day". That same gold coin is worth at least $40-50 today. Without getting into difficult to find detail, the back of the napkin says Roman currency has stood the test of time.
Ours won't.
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At times, those Roman coins were pretty debased. While having collector value, those don't have much intrinsic value.
Even the silver coins I saved as a kid, a dime had the face value of a chocolate bar, 2-2.5 chocolate bars in silver value. That silver dime is worth about half a chocolate bar now.
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In practice, for a high-value transaction, 6 l
Crypto software based, proof of work not required (Score:2)
Not all Cryptocurrencies are doomed, but All cryptocurrencies based on "proof of work" are doomed.
Cryptocurrencies are based on software, they can be changed. They can migrate from proof of work to other methods, Etherium has planned on doing so all along. Bitcoin and other coins could do so if necessary.
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> but All cryptocurrencies based on "proof of work" are doomed.
That would be all cryptocurrencies. PoS has been proven to be equivalent and inferior to PoW.
> adjust the cost of doing that so that the amount of money being transacted is always less than the cost someone wold incur for confidently performing a 51% attack.
Lol, you need to re-read the white paper. Look for the math on "confirmations".
Its very routine to transact amount far in excess of the transaction fees and block rewards. but each subs
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> but All cryptocurrencies based on "proof of work" are doomed.
That would be all cryptocurrencies. PoS has been proven to be equivalent and inferior to PoW.
> adjust the cost of doing that so that the amount of money being transacted is always less than the cost someone wold incur for confidently performing a 51% attack.
Lol, you need to re-read the white paper. Look for the math on "confirmations".
Its very routine to transact amount far in excess of the transaction fees and block rewards. but each subsequent transaction set contributes to the security of past ones, cumulatively. so you assertion is flat wrong.
I don't agree. Suppose you wait ten rounds of confirmations before assuming your transaction is safe. Has this changed the ratio of how much the fraudster gets versus how much it costs? E.g.can one say "well yeah, it's now ten times harder to unroll. so it won't be worth it". Wrong.
that's naive because it's only looking at one transaction. If the fraud keeps adding new transactions every epoch of the bitcoin processing then they increase their potential winnings by 10 also. So the ratio of win versus
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> that's naive because it's only looking at one transaction.
How many fraud transactions can you float? each one you add has a fixed cost, and if the fraud is detected or blocked you could also lose your funds forever.
> that's naive because it's only looking at one transaction. If the fraud keeps adding new transactions every epoch of the bitcoin processing then they increase their potential winnings by 10 also. So the ratio of win versus cost to win stays the same
This doesnt stack; if your attack is
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"Voting cheaters off the island" is also an attack vector. If you can somehow, even temporarily, vote off a large chunk of the collective, 51% of a smaller collective scales down.
Pointless "proof of work" is doomed. (Score:2)
You make a good point, but I can see a potential future space for genuinely useful proof of work based crypto.
An example would be protein folding which was done for free like the SETI analysis, similar scientific tasks could have been wrapped up as useful proof of work. They were not, they were done for free. The work done on protein folding has value to society. Similar productives proof of work tasks could be rewarded by the value tied up in the work. The a share of the revenues from the application o
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I agree. Indeed I've thought about protein folding as a great proof of work if it could be harnessed. Are you working on that?
Can only go so far (Score:1)
No matter how far the price drops, remember that the price can never drop bellow the implicit value of a bitcoin. Oh wait, never mind!
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The value of a bitcoin is how useful it is to transfer money from point A to point B. It's like the cost of a UPS shipping label, or a Western Union money transfer fee. The bitcoin fee part is your cost and hassle to convert from your local currency, and then send the funds to the destination.
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75% drops in value are somewhat routine. This one is slightly deeper, probably because the non-nerd speculators have recently joined the traditional nerd speculators. Many of the non-nerd speculators were fully away of this and expected a drop to $4-5K, it was something they conceded publicly on CNBC at times during those $10K-15K days.
You mean intrinsic, right? (Score:2)
Its not as if wall street types didn't concede ... (Score:2)
Re: Miner Miner Forty-Niner (Score:2)
750,000 pounds of gold was found, which probably went directly to the banking cartels through lending to gold rush businesses, etc. A hundred years later, the families of the guys who sold tools are middle class Americans, and the banks have profited immensely off the gold.
Re: Miner Miner Forty-Niner (Score:2)
He was talking about tradesmen and craftsmen who sold to the miners. My point was that it ultimately ended up with the bankers.
Meanwhile...... (Score:4, Insightful)
Meanwhile, the money I have in Bank Of America and Chase are still worth pretty much exactly what they were worth yesterday.
Re:Meanwhile...... (Score:5, Informative)
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And if the dollar tanks, what do you think Bitcoin will do? It'll take a nosedive too.
I like the idea of cryptocurrencies in general, but I don't think they're mature enough to trust with anything other than "fun money", that is, money you can afford to lose. And the exchanges? They seem to be little more than a place to stash your coins so they can all be stolen at once.
If your exchange gets robbed or hacked or whatever, your money is gone gone gone....but if they rob my local Bank of America or Chase, my
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Which sure sounds impressively frightening. If you're uneducated, clueless, or a bitcoin zealot. (Yeah, I realize the last is kinda redundant.) Someone who is none of those things realizes two things - first, you're cherry picking. Second, that all of those currencies failed during periods of massive economic unrest... While bitcoin is failing for n
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Second, that all of those currencies failed during periods of massive economic unrest... While bitcoin is failing for no apparent reason at all.
Exactly. What drives the price of bitcoin up and down? No one has a clue, and if they say they do they're either lying or mistaken.
People say the stock market is irrational (and it certainly is) but bitcoin is far and away more unpredictable than any stock.
Oh sure, there are tons of "after action" reports that claim to explain why bitcoin did this or that, but you'll notice there are never any reliable reports that predict where bitcoin will be in a week, or a day, or even an hour from now.
Bitcoin (and bloc
minus inflation (Score:3)
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Busts and booms (Score:1)
None of this means a whole lot in the many places around the world where they've started actually using bitcoin as a currency, you know, for real. And that userbase is growing. What you are seeing here is nothing more than growing pains induced by speculators with deep pockets.
Just like an open source project, bitcoin won't go anywhere. The ACTUAL core base will continue using it, once those speculators have bailed stability will return and when bitcoin is still around and has maintained stability for a few
Financial Bubble Deflating (Score:4, Insightful)
This is what a financial bubble looks like after it pops. Should be no surprise to anyone who has studied the phenomenon. We had the dotcom bubble around 2000, and the housing bubble in 2007, and many more before that.
Re: Financial Bubble Deflating (Score:3)
Yes and no. Bitcoin bubbles are at a scale that dwarfs other asset bubbles. The bubbles are much frothier.
Bitcoin Ain't No Bubble (Score:1)
Good (Score:5, Insightful)
What a waste of electricity and the consequential effects on global warming.
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good, its about time crypto-currency crashed (Score:5, Insightful)
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now the price of video cards should return to normal and the supply will be able to fill the demand
Does mining have any effect on the availability of GPUs any more? I doubt it. ASIC mining rigs have taken over.
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Some coins have been designed to be ASIC-resistant, so yes a price drop should affect availability of GPUs.
On the other hand, some coins like Reddcoins which are proof-of-stake don't use raw processing power so don't affect GPU availability one way or another.
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Depends on the cost of power, the "math" needed for that cryptocurrency, the math ability of the GPU at a price, the way a cryptocurrency was set up.
Right now, the math for all of the major cryptocurrencies is such that unless your power is basically free, GPU-based mining is unprofitable. And if you have really cheap power, you'll make much more money by using ASICs.
Yes, there are the ASIC-resistant coins, but they're in the noise.
What I'd like to know... (Score:3)
Take any person or company who invested in bitcoin by buying or by mining, take how many dollars they got by selling bitcoin, take the value of their bitcoins today, subtract their total cost of mining, fees, buying bitcoin. If they are ahead, count them under "profits". If they lost money, count them under "losses". So the guy who mortgaged his house to buy 10 bitcoins for $19,000 worth $4,000 today adds $150,000 to "losses".
But there must be people sitting on tons of bitcoins harvested when it was easy. I wonder if they have any chance ever to turn this into real money.
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So the guy who mortgaged his house to buy 10 bitcoins for $19,000 worth $4,000 today adds $150,000 to "losses".
That 150,000 doesn't just fall into a sinkhole. It goes to other people who sell the coins. So yes, there are people getting rich off Bitcoin by simply trading it. I know a handful of people who earned millions of EUR and/or bought their own apartment with their Bitcoin profits.
I'm not sure if it's all reasonable and fair, but it's a drop in the ocean compared to all the shady deals of traditional finance and stock markets. I do think that mortgaging your house for almost any kind of investment is beyond
The REAL story (Score:1)
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They're idiots. BTC loses money on electricity at this cost so it WILL go up within a fairly short amount of time.
"Bitcoin is expensive to make, so it's going to go up in price! Idiots!" Someone took off early from Econ 101, only got through the 'Supply' side of the lecture. Might want to go back and freshen up on the 'Demand' notes the smart people took while you were off spending your virtual millions...
I saw an ad for bitcoin mining in train (Score:2)