Suppose as a thought experiment that the price of energy fell by a factor of one thousand.
What would happen to the price of gold?
What would happen to the price of Bitcoin?
Discussion
Well, they both would become easier to produce. But the scarcity of one wouldn't change š
But bitcoin wouldn't actually become easier to produce because of the difficulty adjustment, right? Because if the cost of energy falls by a factor of one thousand, this means that (excluding the initial capex of mining rigs for simplicity) people can now afford to run a thousand times as many miners for the same electricity cost. The super weird thing is that for anything other commodity besides btc, this would tank the price. But for btc, the network simply adjusts the difficultly to make each hash harder to find in exact proportion to how much energy you throw at it.
I understand what you're saying and you're correct, but if it's essentially free to run an ASIC, more people could run them.
It would be cheaper and therefore easier for the masses to run ASICs. Now maybe you'd earn 10 sats a day š but the cost to do that would be essentially nothing.
Iām not sure about that. Seems to me that the absolute price of energy is not relevant, i.e. the only way you can make money (amortized over long timescales) is having access to cheaper energy than the average miner
I don't mind any longer because it's not cost effective to do. If mining is free, I'd do it.
Ok if mining is free (like *actually* zero cost in the sense that energy is not longer scarce) we've circled back around to proof of stake haha
You said 1000x cheaper, right? That's essentially free. It's not free, but it's going to cost me 0.4 cents a month instead of $400 a month to run my miners.
Hmmm depends on the speed of the price falling that much.
Yeah if it happened literally overnight the rate of btc being produced would increase temporarily until the difficulty adjustment kicked in. This is just a thought experiment though.