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The article addresses that further down. frankly I don’t quite know if their argument is valid. I am skeptical, as bitcoin existed before it got any significan
by acomjean 8y ago
The article addresses that further down. frankly I don’t quite know if their argument is valid. I am skeptical, as bitcoin existed before it got any significant value.
“. Similarly, when the price of bitcoin falls and miners exit, the cost of mining decreases. However, the number of miners cannot fall below a certain level, because without the miners providing the computing power to maintain the ledger, the bitcoin blockchain will not remain viable.
Mining at a cost higher than the cost at which you can sell in the futures market destroys value. So, any rational investor — even one who strongly believes the price of bitcoin will rebound — has no incentive to mine if the cost of mining is higher than the future price and is better off buying in the futures market. ”
- tomp 8y agoBut buying only makes sense if you can "realize" the gains - for that, the BTC network (i.e. transfers between accounts) has to continue working. In the absence of mining gains from newly-minted coins, rich individuals that want to use their wealth will be paying for mining in transaction fees.
- GreaterFool 8y agoI suppose one source of risk is that if enough miners exit then it becomes viable for a bad actor to purchase enough computing power to mount an attack. IIRC 51% attack happened on one of the bitcoin forks.