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>BTC is no exception: if it costs $1 to make $2 in BTC, you can be sure a lot of people will be 'making' BTC until the cost of making BTC and it's market value
by AgentME 6y ago
>BTC is no exception: if it costs $1 to make $2 in BTC, you can be sure a lot of people will be 'making' BTC until the cost of making BTC and it's market value start to merge.
Bitcoin is weird though because no matter how many miners there are, it's still minted at the same rate globally. If it cost a miner $1 to make $2 in Bitcoin, what would not happen is new miners joining and flooding the market with more Bitcoins until the price of Bitcoin falls. Instead, new miners would keep joining and the miners would be cutting into each other's profits until it cost them all approximately $2 to make $2 in Bitcoin.
- jariel 6y agoThen you're saying people are acting irrationally or there are other non-marginal costs to consider (i.e. startup costs) in which case you're really saying it's >> $1 to mine a BTC. But that's not really the point. Let me put it differently: if it costs $1 to mine $1000 worth of BTC ... then, new miners will flood the market until the cost of mining reaches parity with price. This is not a BTC specific or controversial statement here.
- davrosthedalek 6y agoThe argument is that in most markets, this parity is reached by bringing the price down. For bitcoin, it is reached by bringing the cost up. More miners means it gets harder to mine, so it costs more.
- AgentME 6y ago>For bitcoin, it is reached by bringing the cost up. More miners means it gets harder to mine, so it costs more. I think this is what you meant, but just to clarify: the cost of mining will go up, not the cost of Bitcoin. (Miners joining or leaving shouldn't directly affect the price of Bitcoin. The same number of Bitcoins exist and get minted regardless of the number or activity of miners, as long as it's nonzero anyway, so miner activity doesn't directly affect the supply and demand of Bitcoin.)