The only reason miners spend so much energy is because it's profitable to do so.
The only way security leads price (and this is bound to happen a little bit) is if people actually base their investment decisions on hashrate.
Maybe institutional investors think this way? They obviously will want to be sure their investment is safe.
As far as I can tell, however, the block reward plus fees multiplied by price determines the security budget, which determines security, at least in the medium to long term.
And for now, because the block reward makes up the bulk of miner revenue and is completely predictable, the price of BTC makes a much larger difference in security budget than fees do, especially when fees in sat terms can go down when the price goes up.
FinnStin
npub1ak…aq945
2023-02-24 17:40:47
in reply to nevent1q…6muc
Author Public Key
npub1ak7khwe5x9xu0wqn506zc0d87677ztrejgqxlyu35c822d0h4gusvaq945Seen on
wss://relay.nostr.bandPublished at
2023-02-24 17:40:47Event JSON
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"content": "The only reason miners spend so much energy is because it's profitable to do so.\n\nThe only way security leads price (and this is bound to happen a little bit) is if people actually base their investment decisions on hashrate.\n\nMaybe institutional investors think this way? They obviously will want to be sure their investment is safe.\n\nAs far as I can tell, however, the block reward plus fees multiplied by price determines the security budget, which determines security, at least in the medium to long term.\n\nAnd for now, because the block reward makes up the bulk of miner revenue and is completely predictable, the price of BTC makes a much larger difference in security budget than fees do, especially when fees in sat terms can go down when the price goes up.",
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