FX mining Clarity – FX Dynamite

A little more clarity on…

What happens when mining becomes unprofitable?

How coin switching, four mining lanes, production costs and multiple facilities work together when market conditions change. There’s no bitcoin price where we shut down. Let me explain how it actually works.

Start with what “not profitable” means
It’s not the price chart. It’s what a coin costs us to produce versus what it sells for.If it costs us $50,000 to produce a bitcoin and bitcoin’s sitting at $51,000, we keep mining. Thin margin, but we’re still ahead on every coin, so the machines stay on.

If bitcoin falls to $45,000 and it still costs us $50,000, now, every coin we produce loses money. At that point we stop pointing those machines at bitcoin.Where they go next is the important bit…

...They go to Bitcoin Cash

The bitcoin machines run SHA-256. Bitcoin Cash runs on SHA-256 too. Same algorithm, same hardware, so those machines can mine either one.

The Alpha Engine sits on top of that, watching both, and puts the hashpower wherever it's paying more at that moment. BTC stops making sense, we go to BCH. The system was built to do exactly that.

So when bitcoin goes underwater, our first move is switching, not stopping.

If both coins in that lane end up below cost, then yes, those machines pause. Pause, though. We own them outright. They're in the facility, powered, paid for. No lender, no margin call, nobody forcing us to sell hardware at the bottom. They wait until it makes sense again.

And that's only one lane

We mine six coins on four algorithms and all four run at the same time:

- SHA-256: Bitcoin and Bitcoin Cash, engine picks between them
- Scrypt: Litecoin and Dogecoin, merge-mined on the same machines
- Equihash: Zcash, on its own machines
- kHeavyHash: Kaspa, on its own machines

Litecoin, Dogecoin, Zcash and Kaspa have nothing to do with bitcoin's price. Different coins, different difficulty, different markets. So even in the bad version above, where BTC and BCH are both underwater and that lane is waiting, we've still got three lanes producing.

A bitcoin-only operation has one number to watch, and when it goes the wrong way the whole thing stops. We've got four lanes going at once and the biggest one has a second coin inside it.

Now the bit most people never think about

When bitcoin's price drops, mining bitcoin gets cheaper.
Prices fall, the farms with expensive electricity start losing money and they switch off. Happens every cycle. All that hashpower leaves the network, and the network adjusts itself about every two weeks so blocks keep coming every ten minutes. Fewer machines competing means whoever's still running pulls more bitcoin out of the same hardware.

So our cost per coin comes down. The $50,000 becomes $45,000, maybe $40,000, depending on how many have gone offline.

Which is also why a paused lane isn't just sitting there hoping the price recovers. Its cost is dropping the entire time it waits.

You can watch this happening right now. Eight downward difficulty adjustments already this year, difficulty down around 14% since January. June's cut alone gave everyone still mining about 11% more bitcoin for the same hashpower, and July took another 5% off after hashrate fell nearly 8% in ten days.

What would have to happen for us to actually be stuck

Our production costs would have to climb while the market falls, and stay that way. That's what people are picturing when they ask this.

It doesn't work like that. Costs climb when more miners pile onto the network, and miners leave when the price falls. The two pull against each other. Let's run it through numbers. Say our cost is $50,000 a coin.

What would have to happen for us to actually be stuck Amazing

BTC at $60,000

Everything runs, engine's on BTC.

BTC at $51,000

Still running. Tight, but positive. This is the one people panic about and nothing actually happens.

BTC at $45,000, BCH still above cost

Engine moves the SHA machines to BCH. Other three lanes untouched.

Evan Glover

BTC at $45,000, BCH underwater too

SHA lane pauses. Litecoin, Dogecoin, Zcash and Kaspa carry on. Meanwhile bitcoin farms worldwide are switching off, difficulty drops, our cost falls toward $45,000 and below, and the lane comes back on by itself. We don't need bitcoin to recover. We need other miners to quit before we do.

Everything drops together

Fair challenge, coins do move as a group. But not by the same amount. Zcash was up around 1,690% against bitcoin last year while bitcoin went on to lose half its value from the October peak. And if everything's falling, miners on every network are quitting, so difficulty drops on every network. Our costs come down across all four lanes at the same time as the prices.

Long, deep bear market

Pause what's underwater, run what isn't. We need one lane above water, not four. The machines are ours, so waiting costs time and nothing else. When it turns we're already racked and running while the operations that sold their hardware are trying to buy it back.

Why our numbers are what they are / And it's not one facility Amazing

Bitcoin mining

From the First Step to the Next Horizon

FX dynamite

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