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Date: Sat, 25 Oct 2014 23:50:49 +0200
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From: Melvin Carvalho <melvincarvalho@gmail.com>
To: Alex Mizrahi <alex.mizrahi@gmail.com>
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Cc: Bitcoin Dev <bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] death by halving
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On 25 October 2014 21:53, Alex Mizrahi <alex.mizrahi@gmail.com> wrote:
>
> We had a halving, and it was a non-event.
>> Is there some reason to believe next time will be different?
>>
>
> Yes.
>
> When the market is rapidly growing, margins can be relatively high because
> of limited amounts of capital being invested, or introduction of more
> efficient technologies.
>
> However, we should expect market to become more mature with time, and a
> mature market will result in lower margins.
> The halving can do much more damage when margins are relatively small.
>
> Besides that, there is a difference in ecosystem maturity:
>
> 1. Back in 2012, miners weren't so focused on profits, as Bitcoin was
> highly experimental: some were mining for the hell of it (it was a novelty
> thing back then), others wanted to secure the network, others did it
> because it was hard to obtain bitcoins by other means. But now miners are
> mostly profit-motivated: they buy expensive dedicated mining equipment and
> want to maximize profits. As you might know, at one point ghash.io
> reached 50% hashrate, and miners didn't care about it enough to switch to a
> different pool.
>
> 2. Back in 2012, we didn't have multipools. Multipools automatically
> switches between mining different alt-chains to maximize miners' profits.
> Miners who use multipools do not care how their hashrate is used as long as
> they profit off it.
> Particularly, check https://nicehash.com/ -- you can easily buy hashrate
> to attack a smaller alt-coin, for example.
>
> If the halving will result in a significant hashrate drop (and we did
> observe hashrate drop in 2012, although it wasn't that big), it might be
> possible to buy enough hashpower to attack Bitcoin.
>
This is a good point, imho. Miner sophistication has increased drastically
in 2 years. Sites like ( http://www.coinwarz.com/ ) can heavily influence
mining, 1-2 orders of magnitude on significant levels of hashing.
I think this is more prevalent with scrypt than sha256, litecoin is set to
half reward in 9 months, and it will be interesting to observe what happens
there.
>
>
>
> ------------------------------------------------------------------------------
>
> _______________________________________________
> Bitcoin-development mailing list
> Bitcoin-development@lists.sourceforge.net
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>
>
--089e011609cc6850a20506464a03
Content-Type: text/html; charset=UTF-8
Content-Transfer-Encoding: quoted-printable
<div dir=3D"ltr"><br><div class=3D"gmail_extra"><br><div class=3D"gmail_quo=
te">On 25 October 2014 21:53, Alex Mizrahi <span dir=3D"ltr"><<a href=3D=
"mailto:alex.mizrahi@gmail.com" target=3D"_blank">alex.mizrahi@gmail.com</a=
>></span> wrote:<br><blockquote class=3D"gmail_quote" style=3D"margin:0p=
x 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><d=
iv dir=3D"ltr"><div class=3D"gmail_extra"><div class=3D"gmail_quote"><span =
class=3D""><br><blockquote class=3D"gmail_quote" style=3D"margin:0px 0px 0p=
x 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div dir=
=3D"ltr">We had a halving, and it was a non-event.<div>Is there some reason=
to believe next time will be different?</div></div></blockquote><div><br><=
/div></span><div>Yes.</div><div><br></div><div>When the market is rapidly g=
rowing, margins can be relatively high because of limited amounts of capita=
l being invested, or introduction of more efficient technologies.</div><div=
><br></div><div>However, we should expect market to become more mature with=
time, and a mature market will result in lower margins.</div><div>The halv=
ing can do much more damage when margins are relatively small.</div><div><b=
r></div><div>Besides that, there is a difference in ecosystem maturity:</di=
v><div><br></div><div>1. Back in 2012, miners weren't so focused on pro=
fits, as Bitcoin was highly experimental: some were mining for the hell of =
it (it was a novelty thing back then), others wanted to secure the network,=
others did it because it was hard to obtain bitcoins by other means. But n=
ow miners are mostly profit-motivated: they buy expensive dedicated mining =
equipment and want to maximize profits. As you might know, at one point <a =
href=3D"http://ghash.io" target=3D"_blank">ghash.io</a> reached 50% hashrat=
e, and miners didn't care about it enough to switch to a different pool=
.</div><div><br></div><div>2. Back in 2012, we didn't have multipools. =
Multipools automatically switches between mining different alt-chains to ma=
ximize miners' profits. Miners who use multipools do not care how their=
hashrate is used as long as they profit off it.</div><div>Particularly, ch=
eck=C2=A0<a href=3D"https://nicehash.com/" target=3D"_blank">https://niceha=
sh.com/</a> -- you can easily buy hashrate to attack a smaller alt-coin, fo=
r example.</div><div><br></div><div>If the halving will result in a signifi=
cant hashrate drop (and we did observe hashrate drop in 2012, although it w=
asn't that big), it might be possible to buy enough hashpower to attack=
Bitcoin.</div></div></div></div></blockquote><div><br></div><div>This is a=
good point, imho.=C2=A0 Miner sophistication has increased drastically in =
2 years.=C2=A0 Sites like ( <a href=3D"http://www.coinwarz.com/">http://www=
.coinwarz.com/</a> ) can heavily influence mining, 1-2 orders of magnitude =
on significant levels of hashing.<br><br></div><div>I think this is more pr=
evalent with scrypt than sha256, litecoin is set to half reward in 9 months=
, and it will be interesting to observe what happens there.<br></div><div>=
=C2=A0</div><blockquote class=3D"gmail_quote" style=3D"margin:0px 0px 0px 0=
.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div dir=3D"l=
tr"><div class=3D"gmail_extra"><div class=3D"gmail_quote"><div><br></div></=
div></div></div>
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velopment</a><br>
<br></blockquote></div><br></div></div>
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