This is rarely discussed in the cryptosphere: It’s easy to just buy a Bitcoin and let everybody else lose fiat doing all that processing mining. An honest look at the math shows that something doesn’t add up. This information is from Sunday, Sept 17, 2017, so it’s current to the day…
Below is a brand new shiny Bitcoin miner that won’t even be ready for shipment until November.
This rig will set ya back $3900 (starting price before options, plus another $268 for the power supply):
Power supply unit is not included.
1. Specifications of the Antminer D3 are as follows:
a) Hash rate: 15 GH/s (Variation of ±5% is expected)
b) Power consumption: 1200W (at the wall, with Bitmain’s APW3 PSU, 93% efficiency, 25°C ambient temp).
c) Dimensions of the miner: 320*130*190mm
d) Hashing algorithm: X11
2. Power consumption figures will vary with your PSU’s efficiency, the ambient operating temperature and the accuracy of the power meter.
3. Bitmain recommends use of the APW3++ PSU with the Antminer D3. One APW3++ PSU can not power more than one Antminer D3.
Here’s that power supply your gonna need:
A rig like that is acceptable for a person wanting to get in on the action right now. Who knows the life-cycle of a miner? 2 years max before becoming obsolete? Any Bitcoin Miner that’s older than a couple years, or costing less than $4168, and the hashing power will be severely diminished. For anybody who has ever tried to play the latest Call of Duty Black Ops with the $299 Wal-mart back-to-school special laptop, you know what I mean. It will not work. If you wanna play, you gotta pay a good amount of fiat currency for a decent set-up.
CryptoCompare shows that a rig set-up for this would be a net loser daily, monthly, yearly, or however long the miner choses to lose money by turning it on. Since people are looking to “get rich” off of Bitcoin, it’s not like they’re contributing to some sense of community either, because the community is motivated by profit.
Not only losing fiat currency, but probably worse than the stated losses below, because the estimates are under “ideal conditions” (a.k.a theoretical performance).
It seems unlikely a rig would achieve all of the specs in the real world with latency, overheating, and a host of other issues that prohibit perfection:
Those were the exact specs of that set-up with current Bitcoin price and all that other stuff in their disclosure.
So if mining Bitcoin and all the hundreds if not thousands of other cryptocurrencies out there requires this much energy, is there such thing as Peak-Bitcoin? Meaning at some point the cost of electricity will be so expensive, and maybe not even technologically capable of producing any more Bitcoins?
This analysis seems to think the electricity requirement going forward is going to be exponential.
A major issue with Bitcoin, which may eventually undermine success unless it is remedied, is the massive amount of power required for “mining” of the coins.
The mining metaphor is apt because bitcoins are created through specialized computers looking for the correct codes (hash keys), just like digging for gold. That electronic digging takes more and more power as more and more people dig for that virtual gold. Sebastian-Deetman calculated in 2016 that mining would require as much electricity by 2020 as the entire nation of Denmark currently consumes.
That’s just the beginning. Bitcoin’s algorithm requires that it get more and more difficult over time to mine, as long as mining itself becomes increasingly popular. With an approximately 132-year discovery cycle to mine all 21 million bitcoins, mining power demand will go up exponentially.
So this brings us full circle to the crux of the matter:
Bitcoins cost more fiat currency to mine than the return you get for doing the mining.
There’s the up-front (hardware/software/network) and ongoing (electicity bill/network/repair/replace) costs. Even if you join a “pool”, many have fees. If you wanna play, this rig will set you back $4168, and be a net loser of fiat after paying just the electric bill on it.
So with all the electricity needed to get the whole world using crypto, and all the electricity needed to mine all the other cryptocurrencies out there, and all the electric cars we’re gonna build to replace those gas guzzlers, and space-travel to galaxies far beyond, and thermo-nuclear war with North Korea, then all the hardware and electricity just to maintain and repair all this electric stuff we’re gonna build and have, just where is all this electricity going to come from, and who is going to pay for it?
Oh yeah, then there’s mother nature which knocks out power all the time. Some people in Florida still don’t have power from Hurricane Irma.
Finally, absent thermo-nuclear war, when countries invade other countries and bomb power plants, power grids and all the other energy based resources of their enemies, that requires a bunch of energy to accomplish the destruction in it’s own right, and then a bunch of energy to rebuild after working out some sort of “peace deal”.
Then again, probably nothing…