# What happens when it costs $87,000 to “mine” a Bitcoin which is only worth only $66,000? We’re about to find out . . .
Gold and Bitcoin. So different, yet so alike. A hedge against inflation. Expensive to mine. Limited supply. But wait, is that last part really true?
Gold mining virtually stopped when the price of bullion was at $1,800 a few years ago. Only the most efficient mining operations kept at it. If your extraction and refining costs were more than what bullion could fetch you probably gave your miners pink slips. That’s not a problem today – gold is near $5,000 an ounce. Everybody is working. Nine-pound hammer sort of thing . . .
Here’s where Bitcoin is different. It costs ALL miners about $87,000 to earn a Bitcoin. Mining is the blockchain work data centers do to keep the Bitcoin system from collapsing. There are no secret/cheaper Bitcoin mine in South Africa or the Canadian Yukon. It costs what it costs (Fees, plus electricity and hardware). So when the retail price of Bitcoin gets cut in half – like it did over the past few weeks – some miners began pushing the “off” button. See link below.
If EVERYONE flips the off switch, then theoretically the system grinds to a halt. Nobody will be willing to prove/validate any Bitcoin transactions. What happens to the value then? Does Bitcoin go to zero? Or does Satoshi Nakamoto reveal that he has a secret stash of Bitcoins which he never told us about? Does someone suddenly pump these new ones into the system to keep mining operations from going bankrupt and disappearing?
Allegedly, there are only a fixed number of Bitcoins. It’s a complicated story, but every year Biocoin miners get their “pay” cut as the supply of un-mined coins gets smaller and smaller.
There are 21 million bitcoins that can ever exist. Or so says Satoshi. 19.9 million of those have already been mined/issued. Only 5% are left to be earned by miners. So as miners keep working (validating transactions) those coins will all earned and locked up a lot sooner than some people realize. Then either the secret is revealed – Bitcoins are actually infinite in number – or they’re not. Meaning nobody does any mining, and transactions can no longer be validated/recorded.
This is what’s called “lose lose” by the bookies at the Bad Monkey Sports Bar in nearby Ybor City. It’s not a bookie’s favorite business model. Jimmy the Sneak is currently accepting bets on Sunday’s Superbowl. He’s sitting to the left of the billiards table in the upstairs VIP lounge at Bad Monkey. He takes football wagers, because it’s win win. He sets the odds so that he won’t go bankrupt in the blink of an eye, no matter which team holds the Vince Lombardi trophy afterwards.
I’m betting too. That there’s a secret stash of Bitcoins nobody told us about. If they had told us, some people would have figured out what happens at the end and refused to buy up electrons which don’t do anything except sit on a ledger. People generally won’t buy and treasure things which have an unlimited supply. Like Desert Storm trading cards.
Will Bitcoin whales and institutional holders rush for the exits if an “unlimited supply” farce is revealed? Will there be lawsuits and congressional hearings?
gizram84 on
This is a very routine conversation that happens every single cycle without fail.
This is all part of the design. This is what the Difficulty Adjustment Algorithm solves. Quite possibly the most elegant and important feature of Bitcoin’s design.
LindseyCorporation on
That doesn’t mean anything. They can just plug it back in lol
4 Comments
# What happens when it costs $87,000 to “mine” a Bitcoin which is only worth only $66,000? We’re about to find out . . .
Gold and Bitcoin. So different, yet so alike. A hedge against inflation. Expensive to mine. Limited supply. But wait, is that last part really true?
Gold mining virtually stopped when the price of bullion was at $1,800 a few years ago. Only the most efficient mining operations kept at it. If your extraction and refining costs were more than what bullion could fetch you probably gave your miners pink slips. That’s not a problem today – gold is near $5,000 an ounce. Everybody is working. Nine-pound hammer sort of thing . . .
Here’s where Bitcoin is different. It costs ALL miners about $87,000 to earn a Bitcoin. Mining is the blockchain work data centers do to keep the Bitcoin system from collapsing. There are no secret/cheaper Bitcoin mine in South Africa or the Canadian Yukon. It costs what it costs (Fees, plus electricity and hardware). So when the retail price of Bitcoin gets cut in half – like it did over the past few weeks – some miners began pushing the “off” button. See link below.
If EVERYONE flips the off switch, then theoretically the system grinds to a halt. Nobody will be willing to prove/validate any Bitcoin transactions. What happens to the value then? Does Bitcoin go to zero? Or does Satoshi Nakamoto reveal that he has a secret stash of Bitcoins which he never told us about? Does someone suddenly pump these new ones into the system to keep mining operations from going bankrupt and disappearing?
Allegedly, there are only a fixed number of Bitcoins. It’s a complicated story, but every year Biocoin miners get their “pay” cut as the supply of un-mined coins gets smaller and smaller.
There are 21 million bitcoins that can ever exist. Or so says Satoshi. 19.9 million of those have already been mined/issued. Only 5% are left to be earned by miners. So as miners keep working (validating transactions) those coins will all earned and locked up a lot sooner than some people realize. Then either the secret is revealed – Bitcoins are actually infinite in number – or they’re not. Meaning nobody does any mining, and transactions can no longer be validated/recorded.
This is what’s called “lose lose” by the bookies at the Bad Monkey Sports Bar in nearby Ybor City. It’s not a bookie’s favorite business model. Jimmy the Sneak is currently accepting bets on Sunday’s Superbowl. He’s sitting to the left of the billiards table in the upstairs VIP lounge at Bad Monkey. He takes football wagers, because it’s win win. He sets the odds so that he won’t go bankrupt in the blink of an eye, no matter which team holds the Vince Lombardi trophy afterwards.
I’m betting too. That there’s a secret stash of Bitcoins nobody told us about. If they had told us, some people would have figured out what happens at the end and refused to buy up electrons which don’t do anything except sit on a ledger. People generally won’t buy and treasure things which have an unlimited supply. Like Desert Storm trading cards.
Will Bitcoin whales and institutional holders rush for the exits if an “unlimited supply” farce is revealed? Will there be lawsuits and congressional hearings?
This is a very routine conversation that happens every single cycle without fail.
This is all part of the design. This is what the Difficulty Adjustment Algorithm solves. Quite possibly the most elegant and important feature of Bitcoin’s design.
That doesn’t mean anything. They can just plug it back in lol
Good news!