3 ms·
Without the marginal energy cost of mining blocks from proof of work, what do you think would drive the value of such a currency?
by empath75 8y ago
Without the marginal energy cost of mining blocks from proof of work, what do you think would drive the value of such a currency?
- intrasight 8y agoUtility
- AgentME 8y agoThis question seems to assume that the cost of electricity and mining sets cryptocurrency prices, but I'm not sure why that would be the case. I think it's the other way around. Demand for Bitcoin doesn't increase when electricity gets cheaper / mining becomes more profitable. Mining becomes more profitable when demand goes up. If electricity became more expensive or mining otherwise became less profitable, demand for bitcoin does not go down; most traders and users of bitcoin probably don't even notice. The only direct effect is that some miners stop mining (and the network becomes a little more vulnerable to 51%-attacks). Another way to think about it: if Bitcoin somehow worked without mining, that's no reason for demand or usage of Bitcoin to go down. The value of bitcoins comes from network effects and scarcity.