{"type":"rich","version":"1.0","author_name":"npub1g6vxlp4e0nyhs2dqxxcryztyf5f5hyuaq93nw4r87zcnv0sdsa0qqsl5wd","author_url":"https://nostr.ae/npub1g6vxlp4e0nyhs2dqxxcryztyf5f5hyuaq93nw4r87zcnv0sdsa0qqsl5wd","provider_name":"njump","provider_url":"https://nostr.ae","html":"📅 Original date posted:2016-03-02\n📝 Original message:On Wed, Mar 2, 2016 at 4:27 PM, Paul Sztorc via bitcoin-dev \u003c\nbitcoin-dev at lists.linuxfoundation.org\u003e wrote:\n\n\u003e For example, it is theoretically possible that 100% of miners (not 50%\n\u003e or 10%) will shut off their hardware. This is because it is revenue\n\u003e which ~halves, not profit.\n\n\nIt depends on how much is sunk costs and how much is marginal costs too.\n\nIf hashing costs are 50% capital and 50% marginal, then the entire network\nwill be able to absorb a 50% drop in subsidy.\n\n50% capital costs means that the cost of the loan to buy the hardware\nrepresents half the cost.\n\nAssume that for every $100 of income, you have to pay $49 for the loan and\n$49 for electricity giving 2% profit.  If the subsidy halves, then you only\nget $50 of income, so lose $48.\n\nBut if the bank repossesses the operation, they might as well keep things\nrunning for the $1 in marginal profit (or sell on the hardware to someone\nwho will keep using it).\n\nSince this drop in revenue is well known in advance, businesses will spend\nless on capital.  That means that there should be less mining hardware than\notherwise.\n\nA 6 month investment with 3 months on the high subsidy and 3 months on low\nsubsidy would not be made if it only generated a small profit for the first\n3 and then massive losses for the 2nd period of 3 months.  For it to be\nmade, there needs to be large profit during the first period to compensate\nfor the losses in the 2nd period.\n-------------- next part --------------\nAn HTML attachment was scrubbed...\nURL: \u003chttp://lists.linuxfoundation.org/pipermail/bitcoin-dev/attachments/20160302/1b50893e/attachment-0001.html\u003e"}