What happens if bitcoin mining becomes subsidized with taxpayer money?

[Brandsen]

I’m living in Norway..
The Norwegian government are subsidizing agricultural industry with taxpayer money..

That gets me wondering what would happen if any government suddenly decides to subsidize bitcoin mining?

To me, this seems very problematic if the blocks are not full..

Today the blocks are mostly full and the miners are prioritizing transactions with higher fees.

But let’s say we increase the blocksize limit so that the blocks are no longer full...

In this scenario the miners must decide what the price of blockspace should be, and the miners will compete on offering the best price.

But what happens when one miner gets an unfair advantage like a subsidy from the government?

That miner is no longer dependent on transaction fees and can offer blockspace for free,
which again will drive down the price offered by other miners…

How will the free market deal with this situation if the blocks are not full? 

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[ajareselde]

I fail to see your point here. Blocks being full or not is depending on amount of transactions made, not on the fact of miners having to pay for your mining or not.
The only thing that would be a problem could be spam transactions if there would be o fee's ,or am i missing something here ?!

[notlist3d]

I’m living in Norway..
The Norwegian government are subsidizing agricultural industry with taxpayer money..

That gets me wondering what would happen if any government suddenly decides to subsidize bitcoin mining?

To me, this seems very problematic if the blocks are not full..

Today the blocks are mostly full and the miners are prioritizing transactions with higher fees.

But let’s say we increase the blocksize limit so that the blocks are no longer full...

In this scenario the miners must decide what the price of blockspace should be, and the miners will compete on offering the best price.

But what happens when one miner gets an unfair advantage like a subsidy from the government?

That miner is no longer dependent on transaction fees and can offer blockspace for free,
which again will drive down the price offered by other miners…

How will the free market deal with this situation if the blocks are not full? 

I don't see this happening farming can be very expensive in some places, and cost more then you bring in.  But in a lot of these cases the area needs the food/crop they are planting so the goverment pay's the farmer these subsidies.    Heck I know some land that is paid to not do anything to give wild animals area, as the animals need land and farmers would be farming it.

Chances of government paying for someone to mine bitcoin... very very small. I don't see it happening personally but it's a much different thing then farming.

[Brandsen]

I fail to see your point here. Blocks being full or not is depending on amount of transactions made, not on the fact of miners having to pay for your mining or not.
The only thing that would be a problem could be spam transactions if there would be o fee's ,or am i missing something here ?!

It’s not only farming, for instance the media is also heavily subsidized in Norway…

10 years from now, it’s is not unthinkable that some governments will have a very positive attitude towards bitcoin.
We must remember that all governments consists of people, and some of those people will personally own bitcoin.. Suddenly they might want to support the local mining farm..

10 years from now the mining reward will have dropped to only 3.125 bitcoin per block. At that time, I will not be surprised if some well meaning government wants to subsidize its local mining industry.

I believe this will lead to negative consequences for the network.
Those consequences will be even worse if blocks are not full. 

If the blocks are full:
Miners will simply fill up blocks with the transactions that pays the most in fees.
Users are competing for blockspace, and the price is determined by how much the users are willing to pay.
This does not change if a government suddenly starts to subsidize its local mining farms

If blocks are not full:
Miners are competing to offer the lowest price for blockspace. They try to include as many transactions as possible while at the same time excluding those who pays too little.
The price is determined by how little the miners are willing to demand in fees.
If some of the miners suddenly gets a government subsidy, they can afford to offer a lower price for blockspace.
Then there is no longer any reason for users to include a high fee, because a low fee will be accepted anyway. This will in turn effect everyone who is a miner, because the price of blockspace is reduced globally.

[QuintLeo]

Chances of government paying for someone to mine bitcoin... very very small. I don't see it happening personally but it's a much different thing then farming.

 I'd say "zero" myself with the VERY long shot exception of the Chinese government.

[veleten]

you do realise that subsidising mining is in fact only lowering the electricity price for the miners?
there are only two more ways the goverment could subsidize miners I could think of:
1)loans to miners for equipment purchase (low percentage per annum)
2)discounts on rental if you are to start a mining farm
for that to happen bitcoin must be accepted as legal tender or run as a parallel currency,don't see it happen in Norway or anywhere else next 5-10 years
the whole idea of seniorage is to be able to print money and profit from selling it to as many buyers as possible,this is how Central bank system works all over the world
to change that would require the global system to collapse or change immensely

[ALToids]

There are all kinds of subsidies and penalties already in each area of the works wrt the cost of electricity and any tarrifs placed on imported miners.  In any state actors wanted in well that boat has pretty much sailed.