Block Rewards when Bitcoin hits $1M

[eytrycart]

If, and when Bitcoin reaches a FIAT value of $1M one would assume the cost to mine a single coin would be quite high otherwise everyone would be doing it. Who then would be able to afford the cost every 10 minutes, and would this "cost to mine" be a sum of the costs of all miners?

[hosseinimr93]

.........Who then would be able to afford the cost every 10 minutes..........

Even if bitcoin reaches 1 million dollars and the mining cost increases significantly, people can still join mining pools and continue to mine bitcoin. You don't have to mine a block alone. Note that even now almost no one is able to do so and people join mining pools.

[eytrycart]

Thanks for the reply and yes I do realise you can be in a pool but is seems its not very profitable unless you are using virtually free power. For a dedicated mining company the costs to mine at least one $1M Bitcoin every 10 minutes it would surely mean the cost to get that coin must also be approaching $1M. Presently it takes ~150,000 kWh to produce one bitcoin on average so as the value of the bitcoin increases the cost to produce it must also increase.

[hosseinimr93]

Bitcoin mining has been always profitable and will be always profitable.
Will you mine bitcoin if it costs you more than the price you can buy it in the market?
If the money someone has to spend for mining 1 bitcoin is higher than bitcoin price, the person will no longer mine bitcoin. This causes the total hashrate of the network to decrease. With the decrease in the total hash rate, the difficulty and the mining cost will decrease too. So, mining is always profitable.

[hatshepsut93]

You are forgetting about halvenings, if currently a block rewards 6.25 BTC x $37,000, in the future it could be less than 0.6 BTC x $1,000,000. So the power consumption of the whole network could be less than what it is now.

Who then would be able to afford the cost every 10 minutes, and would this "cost to mine" be a sum of the costs of all miners?

It's irrelevant how much energy it takes to mine one whole coin, because no one really cares about whole coins, miners just want to make profit from whatever the block reward is. And since nearly everyone mines in pools, they will be getting just some milibitcoins from each found block.

[pooya87]

Thanks for the reply and yes I do realise you can be in a pool but is seems its not very profitable unless you are using virtually free power. For a dedicated mining company the costs to mine at least one $1M Bitcoin every 10 minutes it would surely mean the cost to get that coin must also be approaching $1M. Presently it takes ~150,000 kWh to produce one bitcoin on average so as the value of the bitcoin increases the cost to produce it must also increase.

And what is the point you are trying to make? A one of a kind global decentralized payment system worth $20 trillion (assuming $1 million price and 20 million supply) should cost a significant amount of money to secure. It doesn't matter how much electricity it consumes since it can provide a much needed utility to 7 billion people.

[NeuroticFish]

If, and when Bitcoin reaches a FIAT value of $1M one would assume the cost to mine a single coin would be quite high otherwise everyone would be doing it.

No, they won't. Because difficulty will be sky high and the block reward will be much smaller. Because with years the block rewards decrease and with every new miner hashing the difficulty increases.
Actually even current miners may need even cheaper electricity to stay in the business.

[thecodebear]

If, and when Bitcoin reaches a FIAT value of $1M one would assume the cost to mine a single coin would be quite high otherwise everyone would be doing it. Who then would be able to afford the cost every 10 minutes, and would this "cost to mine" be a sum of the costs of all miners?

There's nothing special about Bitcoin at $1 million. Mining will work the same as it always has. Mining worked at $1, at $100, at $10,000, at $60,000, the same as it'll work at $1 million and $2 million and beyond.

The cost of mining goes up in terms of the difficulty adjustment (same amount of resources put into mining gets you less Bitcoin), but the price rises as well. It is a wonderfully designed system. Anyone who has a reasonably good mining system will be able to afford it then, same as today, same as always.

[hugeblack]

If, and when Bitcoin reaches a FIAT value of $1M one would assume the cost to mine a single coin would be quite high otherwise everyone would be doing it. Who then would be able to afford the cost every 10 minutes, and would this "cost to mine" be a sum of the costs of all miners?

When Bitcoin reaches that value, mining hardware will develop and thus consume less electricity.
Research on renewable energy will have reached its peak, and therefore we will find more options that are cheaper and less harmful to the environment.

Bitcoin mining is a profit-related activity. Whenever it is profitable, the number of miners will increase and vice versa, and therefore mining will continue as long as people continue to use Bitcoin and as long as Bitcoin has value (certainly it will have value if the market capacity is 20 trillion)

This is a chart of solar energy costs for the past ten years.

Source --> https://rameznaam.com/2020/05/14/solars-future-is-insanely-cheap-2020/

Source --> https://energypost.eu/5-charts-show-the-rapid-fall-in-costs-of-renewable-energy/

[el kaka22]

It is basically the cost to mine a bitcoin, not cost to mine whatever you are mining. If the price is 100k and you are making 5k with the equipment you have with 4k cost, then when the price is 1 million, there will be a lot more people, but your earning will go to 10k as well while cost will be 9k. So, as you can see the cost goes up but the revenue goes up as well making you still profitable.

The only way that a miner would lose money after a while is the equipment getting older and there will be newer and better mining equipment that will end up profiting while your old equipment not profiting so much. Also there is a slight chance that your electricity could cost a lot more, but usually that doesn't happen too much, they change slight by slight all around the world together.

[stompix]

If, and when Bitcoin reaches a FIAT value of $1M one would assume the cost to mine a single coin would be quite high otherwise everyone would be doing it.

Actually the cost to mine a coin will not change at all before other miners start mining increasing the difficulty and pushing down your own share o the hash rate. If the price goes 20x in a short period of time the "costs" to mine a coin will probably not rise even by 30% in a month, there is simply not enough gear available on the market and standing idle that could be turned on and mine. The only thing that will rise dramatically will be the revenue of miners and their profits. So, bring it on, I can't wait to make 4$ per TH/s  day instead of 18 cents with the same power consumption.

When Bitcoin reaches that value, mining hardware will develop and thus consume less electricity.

Doesn't matter how efficient the gear is, consumption will only go up if the price goes up.
If I make 18$ and burn 4$ in power with an S19j, am I stupid to throw away the gear when I get an S19xp who makes me 24$ and burns 4$?
No way in hell, I'm going to run both of them till they either end up breaking or the j model becomes obsolete and is losing money.

More than two years since the launch of the S9 the entire hashrate would have needed 2 million of them, 2m x 1350w.
Assuming now we have only the latest gear mining we would still need 2 million but at 3050w each and I'm willing to bet nee gear is not even 50% of the current hashrate. What has also tripled since 2017? 

It is basically the cost to mine a bitcoin, not cost to mine whatever you are mining. If the price is 100k and you are making 5k with the equipment you have with 4k cost, then when the price is 1 million, there will be a lot more people, but your earning will go to 10k as well while cost will be 9k. So, as you can see the cost goes up but the revenue goes up as well making you still profitable.

Why would your cost go up if you don't add more gear? And if you add more gear then your share of the reward will also go up.
If at 100x you make 5k and 4k cost then if we assume the price goes up by 10x and the hashrate goes by 5 you will have 10k revenue and 4k costs. For the earnings to double and the cost to go up by 2.125 makes no sense whatsoever.

[eytrycart]

I think most of the replies here have missed my point. If Bitcoin approaches $1M in say 1 - 5 years it will trigger an influx of miners trying to cash in on increased profit margin. I am assuming power costs won't rise 25x in 1 - 4 years so the profit margin to mine bitcoin will increase greatly thus spiking the hashrate (quantity of miners) which will increase the amount of power consumed to secure a block reward. I understand that renewable energy and processing power may make things more efficient but the price of bitcoin will correlate with energy use. It's the same with gold mining, as the value of gold increases more miners will start mining it. My actual point is that this is the limiting factor in the speed of the rise of bitcoins price. Another question is will the spike in global hashrate actually shorten the current block time of 10 minutes?

[eytrycart]

.........Who then would be able to afford the cost every 10 minutes..........

Even if bitcoin reaches 1 million dollars and the mining cost increases significantly, people can still join mining pools and continue to mine bitcoin. You don't have to mine a block alone. Note that even now almost no one is able to do so and people join mining pools.

In a mining pool you are still using energy but just sharing the reward even if your rig doesn't actually solve the puzzle. If this reward becomes very profitable there will be an uptake of miners whether alone or in a pool, the cumulative increased energy use is the same. What I am trying to illustrate is that as the value of bitcoin rises the amount of energy consumed to try and get the reward also increases. When power demands increase the costs go up for everyone so its a feedback loop that will regulate the bitcoin price. The good thing is it will also accelerate cheaper renewable energy production. If in the future everyone could be part of a global mining pool with a minimg rig powered by their electric car, exercise bike or a solar panel on their roof we would have close to a carbon neutral bitcoin network.

[eytrycart]

It is basically the cost to mine a bitcoin, not cost to mine whatever you are mining. If the price is 100k and you are making 5k with the equipment you have with 4k cost, then when the price is 1 million, there will be a lot more people, but your earning will go to 10k as well while cost will be 9k. So, as you can see the cost goes up but the revenue goes up as well making you still profitable.

The only way that a miner would lose money after a while is the equipment getting older and there will be newer and better mining equipment that will end up profiting while your old equipment not profiting so much. Also there is a slight chance that your electricity could cost a lot more, but usually that doesn't happen too much, they change slight by slight all around the world together.

When power companies see the profit margins of bitcoin mining go up they will jack up their prices to cash in for sure.

[thecodebear]

I think most of the replies here have missed my point. If Bitcoin approaches $1M in say 1 - 5 years it will trigger an influx of miners trying to cash in on increased profit margin. I am assuming power costs won't rise 25x in 1 - 4 years so the profit margin to mine bitcoin will increase greatly thus spiking the hashrate (quantity of miners) which will increase the amount of power consumed to secure a block reward. I understand that renewable energy and processing power may make things more efficient but the price of bitcoin will correlate with energy use. It's the same with gold mining, as the value of gold increases more miners will start mining it. My actual point is that this is the limiting factor in the speed of the rise of bitcoins price. Another question is will the spike in global hashrate actually shorten the current block time of 10 minutes?

First off, Bitcoin is not going to $1 million in 1-5 years lol. 10 years sure very possible, but what is with this 1-5 years talk?

Also you are acting like it is suddenly going to shoot up to $1 million out of nowhere, to trigger a huge influx of miners. The price, and miners (the hash rate) will continue to increase gradually.

Cost of mining Bitcoin is not a limiting factor. Bitcoin price goes up according to adoption. Miners follow price rise, not the other way around. When price is up miners get more profitable.

Finally, Bitcoin has a difficulty adjustment to keep the average block time at 10 minutes. This is why it has always been at 10 minutes. There is nothing that can be done to change that. Short term of course it fluctuates, but long term it is permanently set in place due to the difficulty adjustment. The difficulty adjustment is one of the most brilliant things about Bitcoin, and it helped make Bitcoin a currency unlike anything that has ever existed before, and makes Bitcoin mining extremely different from Gold mining.

[Fundamentals Of]

By the time Bitcoin reaches $1 million, the block reward is probably already low. That's in terms of Bitcoin. So there will still likely be a balance out happening. But of course Bitcoin mining will still remain profitable. The reward is low after going through a number of halvings but the value has also risen a lot so everything is still operating strong.

Who would then be able to afford to mine? It's the same miners. Mining rigs will be upgraded to more powerful ones and therefore more expensive most probably, but the return will remain to be enough to pay for the costs and some extra as profit.

[pooya87]

My actual point is that this is the limiting factor in the speed of the rise of bitcoins price.

Why would it be? Bitcoin is not a product that is only sold by the manufacturer (ie. the miners) so that they can set the price and a limit for it. So it doesn't matter what the cost of mining is, the price can go to any levels, whether higher or lower.
What you have to remember is that price affects the cost of mining, but the cost of mining doesn't affect the price.

Another question is will the spike in global hashrate actually shorten the current block time of 10 minutes?

Not exactly, because hashrate is not going to spike a lot (like >50%) in a short period and any smaller increase means the change in the average time between blocks is negligible and the difficulty adjustment (every 2016 blocks) takes care of that difference.

[stompix]

I think most of the replies here have missed my point. If Bitcoin approaches $1M in say 1 - 5 years it will trigger an influx of miners trying to cash in on increased profit margin. I am assuming power costs won't rise 25x in 1 - 4 years so the profit margin to mine bitcoin will increase greatly thus spiking the hashrate (quantity of miners) which will increase the amount of power consumed to secure a block reward.

There is another limiting factor, the supply of mining gear.
To raise the hash rate 10x (assuming a halving happening) you would need 20 million s19j or about 14 million xp, multiply those by 342  chips and if I remember correctly the capacity and wafer size this is over 50% of TSMC capacity for a year.

It's the same with gold mining, as the value of gold increases more miners will start mining it. My actual point is that this is the limiting factor in the speed of the rise of bitcoins price.

Then why is this the limiting factor?
When poeple stop mining for gold does the gold price go down?  When will gold mining be rendered unprofitable would the price go to zero?
Miner follows the price as best as they can do, when that drops we have hiccups in the hashrate, you can see it has been now as we're at -3% despite the last period ending with days of over 10%.

It's actually the other way around, the price is limiting mining and energy consumption, I just hope we don't see it actually happening but a drop below 30k would clear this up as almsot everyone with over 12c/kWh and order gear would stop mining.

When power demands increase the costs go up for everyone so its a feedback loop that will regulate the bitcoin price.

There is no such loop.

The good thing is it will also accelerate cheaper renewable energy production. If in the future everyone could be part of a global mining pool with a minimg rig powered by their electric car, exercise bike or a solar panel on their roof we would have close to a carbon neutral bitcoin network.

There is no such thing as carbon neutral, that is some PR bullshit.
When you breathe, when you fart, when you sweat you create carbon, using any kind of energy is not carbon neutral, those things have to be powered by something, and no way in hell is bitcoin mining going to be powered by solar unless you want it to have the same schedule as banks, with blocks being mined only during sunny days and the blockchain sleeping at night.

[yhiaali3]

In fact, bitcoin does a halving every four years, so mining returns halve every four years. If the price of bitcoin reaches a million dollars, you do not have to worry about mining, mining continues whether the price of bitcoin is high or low and miners will continue mining and get Their rewards vary in value with different prices, what to worry about will happen after many years and not now when the return of mining an entire Bitcoin block is only a few satoshis.

[RealMalatesta]

In fact, bitcoin does a halving every four years, so mining returns halve every four years. If the price of bitcoin reaches a million dollars, you do not have to worry about mining, mining continues whether the price of bitcoin is high or low and miners will continue mining and get Their rewards vary in value with different prices, what to worry about will happen after many years and not now when the return of mining an entire Bitcoin block is only a few satoshis.

Not exactly, I mean the higher the price the more difficulty it gets because there will be more people mining. At a certain level you have very tiny margin of profits for lower level equipment, and those close up when the price drops, but when the price is high, even a simple usb (okay maybe not that much) could mine for profit.

This is why when the price is higher, there is more hash power thrown at bitcoin and that results with higher difficulty and that results with "less" earnings. Of course this less means in bitcoin, if the price is high enough then you will still make more money in dollar terms, but some people do not care about dollar terms.