The third camp are content producers selling wares to collectors. The other two camps make that interesting from time to time. The structure of blockchains add to that.
The digital creators need the blockchains to make money.
And if I understand correctly, once scarcity is removed, the price should plummet.
But if it stays above the cost to mine, those companies will make out like bandits.
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If you normally use U.S. dollars, I donât see any advantage to using a âcoinâ that is backed by U.S. dollars. And I never saw any advantage in making something more complicated than it needs to be.
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The cap wont be lifted. The companies have no interest in lifting the cap. Digital scarcity is feeding them a lot of wealth.
Here is a much better point of view on why BTC is a great idea energy wise.
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Oh but they do.
By design the number of Bitcoins minted per block is reduced by 50% after every 210,000 blocksâabout four years. So absent any price increases, by sometime next year mining will become 50% less profitable. And four years after that, it will become 50% less profitable again.
After the next halving the miners will need the price to increase to stay in business. But what if it doesnât? Keep in mind, Bitcoin is about the same price as it was five years ago. All the small miners have been eliminated. The big players see the writing on the wall: If they donât increase the block rewards, they will be eliminated too.
But as you point out we have a golden goose problem. Wouldnât increasing the cap to say, 42 million discourage ownership thereby killing the golden goose? It might, BUT the goose is dead anyway. In a few years, the miners will be consuming so much energy theyâll need Dyson Spheres surrounding nearby stars to power their operations.
It is already happening. The big players are getting knocked off one by one, and they either have to raise the cap or they will all be eliminated. And they can make the argument that BTC is like ETH. It is scarse, just as not as scarse.
That is the thing the cycle is also four years. Each bottom landing on the previous top and then a year later rising for two years.
The cycle is flattening to two segments of 1.75 years.
The chart is logarithmic and in the manias can not keep up. Charts do not demonstrate the rises.
We are in a bear market where your ideas hold some water. We are coming out of the bear market in 1.75 years this time instead of two years.
The cycling is flattening against a potentially logarithmic rise.
Quick update:
Bitcoin miners continue to play a game of chicken to see who can survive long enough until they can mount a 51% attack. Losses are in the billions.
The average mining cost is calculated by Cambridge University and plotted in a chart by MacroMicro . On August 27, it registered an average cost of $45,877 per mined BTC, against a spot price of $26,089 on the same day â accounting for a loss of $19,588 per unit of the leading cryptocurrency produced coins.
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What an absolutely waste of time, money, and energy - a completely pointless endeavor.
Per the chart, it has not been profitable to mine it for over a year - and for much of the history of BTC.
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Why do we say A fool and his money are soon parted?.
The Captain
Because
- It is obviously and usefully true
- More subtly, because it provides an excellent test for fool detection. ?
david fb
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Ah but the chart looks backwards meaning now is bottom fishing assuming things recover and probably go manic again. Look to the future.
This is not a mutual fund ROI.
The cost of GPUs dropped substantially. Not sure you factored that in. In 2022 GPUs cost a fortune not so today.
Because at the end of the day everyone wishes they were Irish.
Everything Iâve read indicates that the primary cost of mining BTC is the electricity cost (ongoing), not the hardware cost (one time).
Iâve also read that miners hold a large percentage of existing bitcoin. If they donât mine, then transactions canât take place (on the blockchain). If transactions donât take place, or take place very rarely, price discovery is affected. If price discovery is affected, it is VERY likely to be in the downward trajectory rather than the upward trajectory. And then the miners lose a lot on their holdings. Therefore it is in their best interest to continue mining (a little) to keep the value of their holding stable (or rising).
Look at it this way. A miner has 100 BTC and mines one new BTC every two or three months. The miner loses $3k each month in excess electricity cost over the value the new BTC they create. But if the miners stop mining, perhaps the value of a BTC drops from $25k to $20k. That miner will lose $500k (100 BTC x $5000 drop per BTC) if mining stops. I think that miner would rather lose $3k a month, or $36k a year, in electricity costs, than lose $500k on their existing BTC holdings!
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- Launched in 2009, Bitcoin is the first and remains the most successful blockchain-based cryptocurrency globally.
- The creator of Bitcoin under the alias Satoshi Nakamoto is thought to be the largest Bitcoin holder.
- The Winklevoss twins, institutional investors like MicroStrategy, and governments like the United States and China are just a few examples of other well-known Bitcoin millionaires.
Not just crypto but odds are all the financials take a wicked beating from here.
BTC back to $16000 in October. Another bottom maybe in January?
Quantum Computing (i.e. faster processing) and Fusion Electric Power (i.e., cheaper energy) will restore the value of Bitcoin. Itâs a tulip you canât kill.
intercst
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Scarcity creates manic markets.
Anyone can say a market is down that is the end. I wonder how you guys ever made any money. Seriously. Down markets are better than up markets.
Feeling rich and staying rich are two different things.
BTC and Eth will be back. Digital scarcity matters because we live in a digital world. There is business to be done with digital values.
Down markets are better if youâre a buyer. If youâre a seller, not so much.
Scarcity, in and of itself, does not drive value.
Scarcity must be coupled with demand to become valuable.
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On the other hand, quantum computing might make Bitcoin encryption breakable.
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But what does down mean? The way we typically value investments is the current price in relation to expected future earnings. So a low current price is good. But Bitcoin has no future earnings. So its potential upside comes down to if more people want to own it in the future than own it right now. So down means there is some reason lots of people will want to own Bitcoin in the future.
Two problems though. One is that due to Bitcoinâs bizarre, convoluted design, normal financial transactions are virtually impossible with Bitcoin and always will be. It does work for certain niche applications like ransomware attacks and human trafficking, but that is a pretty limited portion of the economy. Because Bitcoin canât be used as money, thereâs no real incentive for people adopt it in the future.
The other problem is that sometime in the spring of next year, the block rewards will be cut in half, which means mining costs will double. Miners are already losing money hand over first, so this will not be good for the industry. I imagine transaction fees will have to skyrocket to compensate, but Iâm just speculating there.
So yes, the market is down, but I donât see a clear path upwards.
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Then again, âransomware attacks and human traffickingâ are worldwide growth industries.
intercst
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