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Cake day: Aug 25, 2023

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We’re at a point where it’s no longer profitable for individual miners

We have been at that point since GPU mining stopped being feasible in 2014, it’s just gotten worse. ASICs made it so the only people who could profit off mining were people who could place a wholesale sized order of hardware from bitmain, etc. Anyone else who claimed to be mining profitably was likely someone who was:

  1. buying old hardware 2nd hand (or new hardware at MSRP) and capitalizing on free electricity in their rental
  2. not selling their Bitcoin immediately (they weren’t making money from mining, they were making it from speculating)
  3. lived in Quebec and could double dip (North America’s cheapest grid + free heating for 8 months of the year)

unless there’s a radical change in bitcoin’s algorithm

The algorithm already does this though. Every 2016 blocks if it took more than 10 minutes per block, the difficulty of mining bitcoin goes down, not up. This is why every halving event you see a radical drop in difficulty, because at a given kWh you are producing half as many bitcoin - meaning people turned off their miners because it’s less profitable. The flipside is the rate of issuance goes down, so there is a lower inflationary effect, and the price of Bitcoin usually also skyrockets (which means eventually these miners re-enter, and difficulty eventually goes back to where it was). It can never get to a point where Bitcoin mining is completely unprofitable unless the price goes to zero, because there will always be a guy with a solar panel and fully paid-off hardware who can mine it for free. Granted, it can get to a point where a lot of people have to take a huge loss on capital expenditures if the price nosedives and never recovers


Miners like Riot Blockchain are operating at a loss

I’m not a finance wizard, but I peeked at their last SEC filing, and first 3 quarters of 2024 they posted a 35m operating loss, but added almost 900m worth of assets to their balance sheet (mostly Bitcoin), which to me tells a very different story


The quote is actually from the article this one paraphrased and linked to, while leaving out all of the actual, you know, information


New data tells us that mining a single Bitcoin or one BTC costs the largest public mining companies over $82,000 USD, which is nearly double the figure it did the previous quarter. Estimates for smaller organisations say you need to spend about $137,000 to get that single BTC in return. BTC is currently only valued at $94,703 USD, which seems to be a problem in the math department.

Bitcoin mining will always be profitable for the people with the cheapest electricity and largest economies of scale. There is a difficulty adjustment algorithm in the protocol that ensures this. When the price tanks people turn off thier miners, difficulty adjusts downwards, and then it takes less electricity to find a block.

tl;dr title is wrong


In this case, by “audit” it was more of a metaphorical “here is our setup, do we plug this into slot A or B, we don’t want to read the 300 page manual”, so 1 hour was literally all it needed

Spoiler: I ended up reading the 300 page manual, it took a week. That was 3 years ago and we have never touched it since


Very much 4

We wanted to get an engineer to audit something we set up, talking like 1 hour phone call, maybe 1 hour of work beyond that if something needed to be adjusted

We wasted like 4 hours on the line with different agencies (talking to sales people) who wanted to connect us with a DIFFERENT agency to do the actual work, who wanted us to sign a 3 year service contract.

Like no, “please just let us talk to one of your senior engineers and bill us $500/hr for his time”