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100 sats \ 6 replies \ @klk OP 3 Jun \ parent \ on: Are you comfortable with Bitcoin's security model? AskSN
Maybe, but that's also not for sure. Unprofitable activities have a tendency to disappear. And for example mining to generate heat even if you got the ASICs for free would only have an maximum theoretical efficiency of 1 W of electricity to 1 W of heat whereas an air conditioner can achieve 3-5x that (see https://en.wikipedia.org/wiki/Coefficient_of_performance). So it would still be a sacrifice to use it for heating in the best case.
And the problem goes a bit deeper. When a lot of miners are unprofitable, that creates an opportunity and an incentive for attackers. It's pretty well explained in https://www.youtube.com/watch?v=0bUpF0wJrxo
And if it's sustained by large institutions and nation states, that's even worse. They could secure the network but implement arbitrary conditions for accepting transactions. Since they're doing it at a loss already so someone paying 2x fees won't make them change their mind about including your transaction or not. If their competitor is making a large transaction they don't like they could try to block it no matter how much fees it pays.
So I would say that miner profitability is key for keeping the network decentralized and secure. The only entities that have been able historically to sponsor large unprofitable things for sustained periods of time (e.g., wars) are nation state through taxation theft. So let's hope that's not what we wish for in this case xD
Unprofitable activities have a tendency to disappear.
You miss my point. They have profitable activities that depend on bitcoin working, so supporting the bitcoin network benefits them and is required for the profitable activities. The mining division can operate at a loss.
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I get you, but the incentives are still weird in that case.
Say Strategy₿ is that large institution that mines at a loss for supporting their profitable activities (if they even have some by then). They would be tempted to prioritize their transactions or de-prioritize/block others. They want to protect their stuff, but would then be one of the few large institutions able to subsidize a large hashrate for the network. And since they're doing it at a loss, they wouldn't care about missing out some fees on their competitors transactions.
It could be that mining is operated at a loss. But that hurts the decentralization of the network, and leaves a lot of unprofitable ASICs for sale at very low prices.
Something like having a lot of guns to defend something but stopping paying the security guards. Some might stay out of conviction or whatever. But only from the ones that have the capacity to work for free. And now there are a lot of guns from the ex-security guys being sold for peanuts in the streets. It's the same guns used to protect than to attack.
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Anybody who needs bitcoin has no interest in attacking it.
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That's a weak argument. There are a lot of possible attacks. A double spend that only affects someone and benefits the miner wouldn't harm the network much. A government concentrating huge amounts of hashrate and only mining OFAC compliant transactions, and ignoring blocks from other miners, is another example. And those attacks can be performed without having any Bitcoin at all. So, no, “trust” is not a solid defense strategy.
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Any "defense strategy" I've heard of is just central planning, which would be bitcoin's certain death. Sure bitcoin may fail, but we don't have to weaken it by micro managing miner revenue.
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I'm not saying otherwise.
There's a difference between acknowledging a possible problem and a call to action. The Bitcoin network is and will be secure in the medium term. And maybe this problem does not even happen in the future. But denying it (or at least the possibility of it) will not make it go away. I'd rather be aware and prepared.