[bitcoin-dev] Superluminal communication and the consensus block size limit

[Jorge Timón]

On Thu, Aug 6, 2015 at 1:51 AM, Gavin Andresen <gavinandresen at gmail.com> wrote:
> On Wed, Aug 5, 2015 at 7:24 PM, Jorge Timón
> <bitcoin-dev at lists.linuxfoundation.org> wrote:
>>
>> Miner A is able to process 100 M tx/block while miner B is only able
>> to process 10 M tx/block.
>>
>> Will miner B be able to maintain itself competitive against miner B?
>>
>> The answer is: it depends on the consensus maximum block size.
>
>
> No, it depends on all of the variables that go into the mining profitability
> equation.
>
> Does miner B have access to cheaper electricity than miner A?
> Access to more advanced mining hardware, sooner?
> Access to inexpensive labor to oversee their operations?
> Access to inexpensive capital to finance investment in hardware?

Yes, of course.
I didn't say "it only depends", just "it depends".
The example is focused on CPU as the "centralizing factor".
And still, all costs are already included in the example:

"Difficulty will tend to increase until the cost to produce a block
(including interest in all the capital needed, paid or not) is equal
to [...]"

I'm focusing on gains but I didn't forget to subtract costs at the end.
I may have "weird" economic ideas, but that will usually just mean
that I mention "interest" in contexts where you may think it is not
relevant.
In other words, expect me to "sin" by excess rather than omission when
it comes to economic costs.

> Ability to use excess heat generated from mining productively?

I agree that mining profitability can radically change in this case
(ie a home heater miner is competing with other heaters, not with
other bitcoin miners).
But until such an economic breakthrough happens I would rather not
rely on it happening.
This could certainly change the mining centralization dynamics in a radical way.
Note that if I buy a heater for 20 usd and expect to mine 5 usd worth
of btc this winter, I will consider it cheaper than an
equivalently-energy-consuming non-mining heater sold for 16 usd.
Maybe next year a more mining-efficient heater will be sold that will
still mine 5 usd worth of btc in its first winter, while my old one
will only mine 0.5 usd the second winter. That's completely fine, it's
0.5 usd extra savings and I was already happy with 1 usd savings in
the first year!
This can be applied to small home heaters, full-building heaters...
Apparently the future doesn't look so bright when it comes to
industrial heating because higher temperatures are needed, but I'm
really optimistic about mining as a byproduct of human-heating
artifacts.
This would also mean that part of the total hashrate would travel the
globe with the winter, which would also have its own benefits (and
maybe new risks?) to decentralization.

When/If this happens, I think everybody should carefully reconsider
all their assumptions about mining centralization.
By "this", I mean production of mining devices whose primary purpose
it's not mining but rather heating (I don't think many people realize
about the huge economic consequences of this seemingly-small
difference, not even companies specialized in bitcoin mining ASIC
production).
It would also save me a lot of discussions with some ecologist friends
(the fact is that I'm much more worried about bitcoin's huge subsidies
on bitcoin's mining and what that means to the environment than I
usually let them know), but that's another topic...

> The number of fee-paying transactions a miner can profitably include in
> their blocks will certainly eventually be part of that equation (it is
> insignificant today), and that's fantastic-- we WANT miners to include lots
> of transactions in their blocks.

At the same time we want mining to be (I was going to say "remain" but
I can't help with being pessimistic about the current mining
situation) decentralized, don't we?