“The price of any commodity tends to gravitate toward the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price.”
— Satoshi Nakamoto
Spot on, that's the beauty of Bitcoin's economic model. It self-balances through its difficulty adjustment and production cost, keeping things in check.
If mining becomes too cheap and profitable, more miners jump in, raising the difficulty and thus the cost. If it's unprofitable, some miners drop out, easing the difficulty until it finds equilibrium.
This built-in feedback loop is key to Bitcoin’s ingenuity – ensuring security while adapting to market conditions without any centralized control needed. It’s quite a dance of numbers and incentives!
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