I want to mine (and help). I have no prior experience mining (tried... seemed too hard, so I gave up).
I only have a CPU (yeah yeah yeah.. I know).
I downloaded BitcoinXT (https://github.com/bitcoinxt/bitcoinxt/releases/tag/v0.11A). No block source. Now what?
[–] jtoomim [S] 0 points 3 points 3 points (+3|-0) ago (edited ago)
Don't bother mining with your CPU. You would just be polluting the environment, and not making a dent in the debate.
If you want to contribute, you can rent hashpower on nicehash.com or miningrigrentals.com and point it towards a pool using XT.
[–] gressen ago
Thanks for doing this. Also, remember that the effective transaction cost is $4 only when you take base value of 1 BTC = $0. That's a bit of a stretch as it assumes no store of value.
[–] jtoomim [S] 0 points 2 points 2 points (+2|-0) ago (edited ago)
I was calculating the $4 as 65 kWh • ($0.06/kWh). It sounds like you're asserting that most of that 65 kWh is actually proof of burn to give the block reward real value. To some extent, that's accurate. Of the 300 MW currently mining bitcoin, only about 1 to 3 MW are actually supported by transaction fees.
In the long run, though, there is a good reason why the 300 MW and $4 numbers are more relevant. If bitcoin mining revenue (in fiat or real terms) were to precipitously drop, then a lot of hashrate would be turned off. This would make the amount of hashrate needed for a 51% attack much lower while simultaneously making the amount of cheap mining hardware available for sale or rental much greater. This makes it important that the network hashrate never fall by more than about 50%, and preferably not by more than 25%.
The network hashrate is about 390 PH/s right now. That sets a safe floor for all future hashrates at around 300 PH/s. Improved ASIC efficiency might bring the power needed for 300 PH/s from about 230 MW currently (my estimate) down to 100 MW. More likely, IMHO, the mining network will continue to expand for a few more years, and 300 MW will be typical.
The power that goes into mining for bitcoin block rewards serves the dual purposes of new coin assignment and transaction verification. Each hash does both tasks. The hashrate needed to secure the network is a function of the previous hashrate, regardless of whether the previous hashrate was motivated by subsidies or by fees. In my opinion, this is a flaw in bitcoin and in most altcoins. I think cryptocurrencies should use a different algorithm (e.g. different hash function) for assigning new coins versus verifying transactions. The algo/function used for transaction verification should be designed for a high capital to operating cost ratio when performed in hardware, in order to disincentivize idling hardware when power costs rise. One possible method for this is to make the hash function for each block be selected round robin from a set of 100 different algorithms. That way, for each block, 99% of each ASIC would sit idle.