Sorry if this has been discussed. I'd like to know your opinion about the following scenario:
1. Bitcoin price increases up to 1M USD
2. Heavy investments in Bitcoin mining stabilize the mining profitability at ~11% per year or ~0.03% per day.
3. Professional miners with big efficient mining farms control 99% of hashing power.
4. Let's say median miner spends 1 000 000 USD daily to mine 1 030 000 USD in BTC and to receive a profit of 30 000 USD every day.
5. Suddenly Bitcoin price crashes from 1M USD downto 100K USD and stays there for a while.
6. Now median miner spends 1 000 000 USD daily to mine 103 000 USD in BTC and receives a daily loss of 897 000 USD.
7. Miners won't tolerate such losses for a long time. They will shut down their mining farms and sell them for cheap (if they can).
8. Bitcoin network will loose 90% of its mining power. It will take 100 minutes in average to generate new block. And it will take months to adjust the difficulty.
9. Moreover somebody can easily do a 51% (...90%) attack using the hardware bought from big miners.
Does it sound like a possible scenario that could happen naturally or provoked intentionally?
This is an interesting scenario that I also thought about. Many comments seem to be claiming it could happen, but I think the figuresdon't even need to be as dramatic as you suggested. Let's say miners can mine profitable with the $1m BTC price. Asyou point out, the margins are always tight, due to competition. It seems you might actually only need a smaller drop (say 50%). Then the running costs makes it unprofitable. There are plenty of other currencies to mine, maybe large portions of miners move to other currencies that do give returns that can cover running costs.
