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Ok, a real life comparison, lets say there are 1000s of real life mines around the world that currently mine gold for say $50 per gram, but suddenly a processin
by fizzynut 4y ago
Ok, a real life comparison, lets say there are 1000s of real life mines around the world that currently mine gold for say $50 per gram, but suddenly a processing technique lowers that cost for all miners to $0.50 per gram. In any normal market the price of gold should trend down.
- melenaos 4y agoYou would be right if it continues to be proof of work. More miners would mine more ETH. But this is not the case, the 'mined' ETH will come from proof of stake. Some people with more than 32 ETH and an online server will keep the engines rolling and get 5% in return for their service. The less power is because the electricity is used for serving instead of mining.
- hackernudes 4y agoHow about this - X units of gold are produced each year. Then all of a sudden it's cheaper to mine gold, but magically still only X units of gold can be mined each year. What happens to the price of gold? What if less than X units are mined? From what I understand, ETH issuance rate is going to go down after the merge.
- Ancapistani 4y agoNope - price is a function of supply and demand. In your hypothetical, demand stays the same. The supply stays the same, too - because the gold mines are still limited to the same amount of gold they get out of the ground. So long as the amount of gold is mined unchanged, the fact that the processing is cheaper makes the mine more profitable but doesn’t change the price of gold.