Given that it’s no longer profitable to mine, this should come to a close relatively soon.
There was an article claiming that making the rounds a week or two back, but it was highly misleading and didn’t understand the technology. Bitcoin automatically adjusts its difficulty so that it’s just barely profitable to mine, if it becomes unprofitable then it readjust again in short order to fix that.
Well, that’s a bummer. I don’t care about the space (other than disliking it), so when someone says something that’s inaccurate, I need someone like you to tell me if they’re wrong.
It can be a thankless role sometimes, a lot of people are very personally invested in hating cryptocurrency. Often they don’t want accuracy, they just want to hear that something bad happened to crypto. So when I come in with an “um, actually” I become the villain. :)
How? Is bitcoin indexing very local power provider in every region to adapt difficulty to power pricing?
Texas is a private grid that has far more pricing fluctuations than larger grids.
No, it bases its difficulty adjustment on the rate at which blocks are produced. They are supposed to be produced once every ten minutes, on average. If the time between blocks goes above that then difficulty is too high and it’s adjusted downward, and the reverse if the blocks are being generated more quickly than that on average.
Then no, bitcoin is not able to keep it’s difficulty low enough to maintain profitability in regions with volatile/high power pricing. If there’s a heat wave or ice storm in Texas, the power pricing spikes due to higher demand.
Bitcoin miners often operate intermittently, though, shutting the mining rigs off whenever the price of electricity spikes and turning them back on again when the price goes low enough to be worth it. So volatility alone isn’t going to determine whether it’s profitable to run a mining business, the average price is still the most important determinant. Renewable energy sources like hydro, wind and solar are actually extremely attractive for Bitcoin mining operations because the energy providers can’t always control how much electricity is being generated, resulting in periods where they’d glut the market. In those situations they’re willing to sell electricity at below market price and a mining business can fire up mining rigs to use that cheap excess.
It’s quite possible that Bitcoin is not profitable to mine in Texas if the average price of electricity is too high. The article that was making the rounds didn’t specify that, though, it just said that Bitcoin wasn’t profitable to mine in general. I am not a fan of Bitcoin’s proof-of-work approach, modern cryptocurrencies use proof-of-stake instead. But the basic idea for how proof-of-work operates is sound, it uses market forces and game theory to ensure that the “correct” amount of mining is going on by making it so that profitability is always on a razor’s edge and the less efficient mining operations have to shut down.
Bitcoin, sure. They’ll just mine whatever they can.
