Bitcoin Forum

Will Mining fee's keep mining alive?

I was wondering how mining will stay alive if the difficuly goes really high and the price doesn't raise or even lowers per coin.

If difficulty goes to high then marginal miners will be unprofitable ... they quit and difficulty falls.

That's the plan. Once all (well, almost all) coins are mined, miners get their rewards from transaction fees - and not from block reward.

In terms of pooled mining, where do the transaction fees go now? Operators keep them or they are part of the shares?

Depends on the pool.  Some pools included them in miner rewards, some keep them (an effective ~1% to 2% hidden fee).

Ah, I see, Im just really curious about give-me-ltc and wemine ltc, as those are my main pools and I know wemineltc is having financial issues covering the transaction fees just from paying their own miners, so Im assuming there is no way they distribute any collected fees.

Difficulty will not fall at first.  You assume people are intelligent.  I think it will slow and flat line.

A lot of variables to consider
Miners with and without electric bills
Miners that are good and bad at math
Miners that speculate the appreciation of coins

What we need is hedging.  Miners need futures contracts so we can offset the difficulty of mining in the hole.  If hedging instruments appear then I'm sure mining will continue even as difficulty accelerates.

Hedging is sort of available through the purchase of shares/stocks in mining operations currently, notably asicminer of course.

I cant say I would be sad if the difficulty suddenly started dropping because everyone else was getting out. 

Difficulty has dropped many times in the past.  When it drops the remaining miners will be more profitable so they have more of an incentive to stay.