FinnStin on Nostr: The only reason miners spend so much energy is because it's profitable to do so. The ...
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.
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.