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If the cost of mining is higher than the price, then people won't mine, and the cost will go down. They're the same thing in the end, as long as you don't acco
by mavhc 6y ago
If the cost of mining is higher than the price, then people won't mine, and the cost will go down.
They're the same thing in the end, as long as you don't account for people paying more to get bitcoins now because they know they'll be more expensive in the future.
So in the end the price of a bitcoin (not accounting for the future), will be exactly the cost of electricity to mine it.
Once you account for the future however you realise if you buy now you're getting them cheap, which pushes up the price, and thus causes it to be more profitable to mine, which pushes up the cost of mining, which causes it to be less profitable to mine.
The entire thing was designed by someone who took 1 economics class and thought inflation was a bad thing, so designed in multiple types of deflation, thus making it useless as a currency (who would ever sell a bitcoin?), and bring about the apocalypse faster
- Tenoke 6y ago>If the cost of mining is higher than the price, then people won't mine, and the cost will go down. People will roughly decrease mining up to the new cost. That doesn't lower the cost further. If a mining pool explodes, decreasing the total power going into mining the price will not be affected. The causality is fully from price>mining output, and there's no mechanism for the opposite since mining produces the same # of coins regardless of the amount of energy put in.
- Nursie 6y ago> If the cost of mining is higher than the price, then people won't mine, and the cost will go down. Absolutely, the price of BTC drives the viability of mining, BUT the cost of mining doesn't have the reverse effect, it doesn't affect market price. And yes, I agree, the whole thing is a clusterfuck :)