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Miners are incentivized to keep adding hardware/electricity until total cost = revenue. To pay their bills, they have to sell their new bitcoin to people which
by mrep 5y ago
Miners are incentivized to keep adding hardware/electricity until total cost = revenue. To pay their bills, they have to sell their new bitcoin to people which is effectively like a fee as their selling of 21 billion dollars in new bitcoin supply to pay their bills reduces the price of bitcoin acting like a fee on buying it.
- nybble41 5y ago> To pay their bills, they have to sell their new bitcoin to people which is effectively like a fee … No, that's nothing like a transaction fee. The person submitting transactions to the network doesn't pay the seigniorage for minting new bitcoins. There is inflation due to the mining rewards (currently less than 2% annually, and set to decrease over time) which places some slight downward pressure on prices. That inflation is a cost for those holding bitcoin, not those spending it—not that anyone would notice it given the way the price has appreciated.