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The cost of a bitcoin transaction is not adequately captured by transaction fees. There's two alternative ways to look at it: 1. Divide miner revenue (fees + s
by petmon 4y ago
The cost of a bitcoin transaction is not adequately captured by transaction fees. There's two alternative ways to look at it:
1. Divide miner revenue (fees + seignorage) by the number of transactions, yielding the total amount that miners extract. It was $34m today, with ~261k transactions, yielding a cost per transaction of $130. [1]
2. Estimate energy cost at 1,173 kWh per transaction [2]. If you assume cheap electricity at say $.09/kWh you get a cost of $105 per transaction in electricity alone, which ignores hardware capital costs, etc.
Either way the cost is over $100 per transaction, and would be reflected in a falling value of BTC. But it may be masked if there's an influx of new money into the system.
1: https://ycharts.com/indicators/bitcoin_miners_revenue_per_day https://ycharts.com/indicators/bitcoin_miners_revenue_per_da...
2: https://fortune.com/2021/10/26/bitcoin-electricity-consumption-carbon-footprin/ https://fortune.com/2021/10/26/bitcoin-electricity-consumpti...
- danuker 4y agoI agree, and I think this is the largest problem in BTC. If the creators had predicted its explosive growth, they would have chosen a faster rate of reward halving, more quickly bringing the transaction fees in line with the externalities. Perhaps someone could create a "Bitcoin Green" fork which would simply speed up the reward halving to once a year instead of once every 4 years, since by now, everyone has heard of Bitcoin, and only large specialized operations can mine it profitably (thus the reason for its inflation has disappeared).
- dmichulke 4y agoRe 1: Shouldn't we then also add the increase in the monetary base to the cost of a dollar transaction? 3.4 trillions in Jan 2020 -> 5.8 trillions now https://fred.stlouisfed.org/series/BOGMBASE https://fred.stlouisfed.org/series/BOGMBASE