nebulousmenace (Sandy B.)
@nebulousmenace
(he/him) Still trying to get the politics under 50% on this account. (Green energy does not count.) Less fascism, plz. I think I'm @[email protected] .
05-09-2018 19:48:03
10,0K Tweets
157 Followers
291 Following
Duncan S. Campbell Am I about to answer a rhetorical question? PERHAPS.
... Bitcoin was always founded on bullshit.
Duncan S. Campbell nebulousmenace (Sandy B.) It's not the cost of energy that secures the network. I'll try to explain over a few tweets.
POW prevents the ability to 'print money'—Think of it being backed by physics much like USD was backed by gold.
So let's assume energy prices get insanely cheap.
Duncan S. Campbell nebulousmenace (Sandy B.) 2) You and I, along with everyone else buys an ASIC to mine with this cheap energy.
The network sees this influx of hashrate and will adjust the difficulty accordingly.
Mining difficulty continuously changes both up and down to keep the block time at 10 minutes.
Duncan S. Campbell nebulousmenace (Sandy B.) 3) So the difficulty increases and there is less bitcoin to go around to us miners from every block that is mined due to everyone and their mom is running miners.
But we will continue doing it because our marginal cost of operation is near zero with our new found cheap power.
Collin McLelland 🏴☠️ nebulousmenace (Sandy B.) So whether energy is abundant/scare/cheap/expensive doesn’t really matter to Btc because of the supply-demand dynamics of mining?
Collin McLelland 🏴☠️ Duncan S. Campbell nebulousmenace (Sandy B.) Great explanation overall but I believe #3 above is incorrect and makes the bullish claim questionable.
Difficulty ensures block time of around ~10 minutes, so Blocks/Time and BTC/time are relatively fixed and the network solves for difficulty given hash.
Collin McLelland 🏴☠️ Duncan S. Campbell nebulousmenace (Sandy B.) So increase hash would increase difficulty which maintains ~10 minute blocks and doesn't restrict cumulative supply over time.
It does distribute block awards (BTC) among a larger pool of miners, which would create a more competitive market and force BTC toward the marginal
Collin McLelland 🏴☠️ Duncan S. Campbell nebulousmenace (Sandy B.) cost of production which could be found as a function of electricity cost, GPU efficiency, difficulty and block awards.
So if energy price were to drop significantly, I think it would be bearish on BTC price.