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The cost to mine adjusts to ensure blocks are mined. Bitcoin does not depend on a specific dollar value to ensure nodes add blocks. Nodes that add new blocks e
by alexmingoia 6y ago
The cost to mine adjusts to ensure blocks are mined. Bitcoin does not depend on a specific dollar value to ensure nodes add blocks.
Nodes that add new blocks earn both new Bitcoin rewards (until ~21 million bitcoins are created) and transaction fees. If hash power drops from miners going out of business, then difficulty adjusts and competition for fees is reduced, reducing the cost of mining until there are miners again. When all Bitcoins are mined, nodes that add blocks are still compensated from transaction fees. They compete for transactions by offering lower fees, and in this way the transaction fee is determined by the market for Bitcoin transactions.
- mckirk 6y agoYou are correct, I hadn't taken the difficulty-adjustment into account. So that means a lower Bitcoin price does force miners out of the market, but after at most 14 days, the difficulty would adjust to stabilize at 10 minutes/block. That might still create a period of instability where the network lacks hashing power, but it's not nearly as bad as I thought. And since the same number of transactions would be achieved with less hashing power, I guess the environment would gladly see Tether collapse :P
- garaetjjte 6y agoThere's some speculation that bitcoin will be unstable without block rewards, though. https://www.cs.princeton.edu/~arvindn/publications/mining_CCS.pdf https://www.cs.princeton.edu/~arvindn/publications/mining_CC...