I'm far from a crypto expert but aren't costs largely GPUs and electricity here?

Those are now being driven by massive AI demand and are likely to remain so for the forseeable future. So how would costs go down?

It sounds very similar to things like oil production, gold mining, and even farming. When the price is high, everyone wants in on the action. As supply explodes, the prices drop. Once prices get low enough, the costs to pump the next barrel of oil, find the next ounce of gold, or harvest the next acre of a certain crop; exceed the reward. When that happens, wells are shut down, mining operations suspended, and different crops planted. The cycle begins again.

If "difficulty drops, costs go down" so ought the price? Isn't that basic economics? Or are they chasing the "phase difference", lag, between supply demand?

This only works when the difficult drop rates are below miner leaving rates.

Which in normal times, are something taken for granted, but once it does happen, the edge case collapse the entire system.

edit: the earlier language is not exact, the scenario is an exponential drop of value that results in exponential drop in miner willing to mine until this discrepancy can be resolved. i.e. the system is not protected against extreme volatility (e.g. -99% over a block cycle)

Its still true and shows one of many issues with bitcoin.

Based on bitcoin cryptobros, you need a certain amount of independent miners for the 'quality' of bitcoins. A bitcoin miner if its a state, can operate with a loss a lot longer if not even infinit, than the decentralized normal people (who do not exist anyway).

It also creates a lot of pressure on miners if you do not run your gpus, yuou are also at a loss, which can break the mining for everyone if too many in parallel go offline, than go olnine again because difficulty droped to much.

And if it becomes to volatile, no one wants to risk it anymore

What does “leave” in this context mean?

A perpetual boom bust cycle? Sounds healthy.

> […] why would they sell bitcoin to continue funding their mining operations […]

There are usually some fixed costs involved and you need cash flow. Without cash flow, your business can shut down pretty damn fast. With cash flow, your business can stay around longer, maybe long enough for the economics to shift.

This sort of thing happens with oil. There are oil producers which sell at a loss. There was even a brief moment when the price of an oil barrel went negative, which meant that if you gave somebody a barrel of oil, you had to pay them for the privilege of taking that oil off your hands. Oil producers did not all shut down when that happened.

I am a little doubtful of the $19k figure anyway.

> It would actually make more sense to sell all their bitcoin, flood the market with coins to do the price, wait for large miners to collapse and then restart mining at hopefully lower prices.

This kind of market manipulation is not so straightforward.

It’s not a lie, nor a damn lie. It’s statistics!

If everyone stopped mining transactions couldn't go through anymore and the value of bitcoin would drop. If you're heavily invested in bitcoin that's bad. Also miners try to squeeze in their preferred transactions which they can't do when they're not mining. Finally the costs dont drop to zero when you turn the miners off, so the loss from mining might be less than the loss when not mining.

When I was mining circa 2017 - 2021 (approx. 1 BTC/month and 25-30 ETH/month) and planning it all out, I prepared myself psychologically to operate for up to 2 years without any profits or selling. It was a hard pill to swallow and a huge risk; my costs were $8500/month in electrical and then another ~$2200 on a lease for the warehouse. When it dropped to $3,000/BTC a few months after I came online and stayed there for 6-8 months, I started wondering if I was the biggest dumbass in my county.

Thankfully, it all worked out in the end very well. I don't know how anyone would put in the effort/money to get a major crypto farm going and plan to just cash out every month to pay bills. What's the point? I always thought of it as a long-term bet on the price going way up, which it did.

It's a very low effort article. There are several places where the cost of electricity is roughly zero and state actors have interest in Bitcoin (Iran/Russia) or strong actors more powerful than the state (Libya/Venezuela). It's not surprising that this is good news for them as mining rigs for Bitcoin are much lighter to transport than the ones for oil.

You're missing that humans are often irrational.

They may be hoping it goes back up.

If you bought a bunch of hardware to mine bitcoins, then not using that hardware represents a 100% loss of value. You may lose money producing, but you would lose even more money not producing.

You're not missing anything. As you can see if you read through the thread, they rely on bitcoin miners being heavily invested into bitcoin and bitcoin equipment, so those people will operate unprofitably to prop up their holdings. It's a moron's economy. A system that relies on externalities and corruption, and produces nothing of value. It's the art market with no art.

If bitcoin miners are smart enough to have anticipated this, and decided not to hold onto bitcoin and just let it drop; and also to have repurposed their equipment, sold it to bigger fools, or have just run it into the ground, none of these ideas make any sense.

Why would they, though? The real answer is that governments and monopolists are propping up bitcoin through simply handing tax money to bitcoin holders, and in the case of the latter (also government tit-suckers) leveraging themselves to pump up bitcoin markets when they are down. I'm sick of humoring this because it was once mildly interesting technically. It's a criminal scheme and everyone involved needs to go to prison. When I hear a politician say the word bitcoin, I'm going to do everything in my power to damage that politician.

Totally different infra: bitcoin these days is all dedicated ASICs that have basically no other use, unlike GPUs.

Hash mining asics don’t work well for AI

Article covers that briefly.

SMST (Defiance Daily Target 2x Short MSTR ETF) could be a rough equivalent.

As the other poster mentioned though, many miners won't be using oil-based energy sources, so it does make one wonder about cause and effect. Maybe a dip in BTC would've done it regardless of oil?

You can take stable-coins, borrow bitcoin against them and sell them. (Fully or over-collateralized). Then buy back bitcoin if/when it drops.

If you’re wrong, you lose your stable-coins.

Let us know how it goes :)

The CME offers Bitcoin futures which can be shorted if you have a futures trading account with a broker.

If you're being sincere, there are many easily accessible ways to short Bitcoin with leverage.

There is BITI which is the inverse of IBIT, the largest Bitcoin ETF afaik