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Please just stop and think for a moment FFS. Miners care about where their bitcoin comes from. Let's imagine the case where 100% of their income comes from the
by cowtools 4y ago
Please just stop and think for a moment FFS.
Miners care about where their bitcoin comes from. Let's imagine the case where 100% of their income comes from the block reward and 0% from fees (seeing as this is nearly the case right now):
1. the block rewards are getting CUT IN HALF every once and a while. If the price of bitcoin stays the constant, their rewards in terms of dollars will be CUT IN HALF. The only way for their income (the upper limit on they can spend on electricity, hardware, etc.) to increase is for the price to increase by more than DOUBLE every time the mining reward gets cut in half.
2. the block rewards increase the supply of bitcoin, decreasing the market cap/price over time. It depends on the emission schedule. Even if the block reward was a constant 1 bitcoin per block, then you would just have a different (logarithmic) inflation/block reward graph with the same characteristics.
- xmprt 4y agoLet's say 100% of income comes from block rewards of 1 BTC. If it costs 0.5 BTC to mine a block then miners will beef up their mining capacity so they can mine more. In a vacuum, this would be great, but because of how mining works (winner takes all), the cost of mining would go up as the number of miners increases. This will keep happening until the cost to mine is close to or equal to 1 BTC (and because of currency conversion, the cost might even exceed 1 BTC today but miners are hoping that the price goes up so they can sell at a profit). Let's say tomorrow, the income is cut in half. All of a sudden, most of these miners would become unprofitable and stop. However as a result, the cost of mining will go back down to 0.5 BTC. It's a self balancing system but that also means that it's fundamentally flawed for reasons mentions by previous commenters in this thread.