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But "it's still about limiting money supplies" is correct, no? One's investment in mining equipment becomes half as profitable every so often.
by brokenmachine 2y ago
But "it's still about limiting money supplies" is correct, no?
One's investment in mining equipment becomes half as profitable every so often.
- olalonde 2y agoNo, mining profitability and money supply are distinct concepts. In fact, mining profitability constantly fluctuates depending on many factors aside from the block reward (e.g. electricity cost, total hash rate, equipment depreciation, BTC price, etc.). Bitcoin could have been designed with a different money supply mechanism (e.g. no halvings) but it would still have required mining. The hash rate has basically no impact on the money supply. That's because mining doesn't solve the problem of limiting the money supply, it solves the problem of decentralized consensus, aka the double spending problem.
- brokenmachine 2y agoI understand the purpose of mining and how the hash rate adjusts but I'm trying to understand about the profitability. Imagine you are a miner and a halving is next week. One week you earn 1btc. None of those other factors you mentioned have changed. Then the halving happens so the next week you make 0.5btc. However yours and everyone else's held bitcoins are still worth the same as they were before. Hasn't your mining profitability halved?
- olalonde 2y agoGiven the scenario you proposed, yes it has.