Doesn't higher bitcoin prices more than compensate for reduced block reward?

[headingnorth]

As a miner if your  block reward is cut in half but the value of the reward has more than doubled from what it used to be then shouldn't that more than compensate you
for the loss in quantity you are getting post-halving? In other words the value of the reward is what matters not how much of it you receive?

The value of bitcoin can be expected to at least double with every new cycle, along with the number of people using bitcoin.
So miners will also be receiving at least double the volume of transactions fees as bitcoin becomes more popular and more users are entering the space.

[FatFork]

How do you figure the value of bitcoin to at least double with every new cycle? No one can predict that.  You make a reasonable point though - the value of the mining reward matters more than the quantity alone and  operating costs like electricity eat up a chunk.  But its not the full picture.  We can't ignore the arms race amongst miners.  With more competition comes greater difficulty securing blocks.  The same gear yields fewer returns over time.  Miners must constantly plunk down capital to stay in the game with better hardware.  So there are other crucial factors at play beyond the reward value.

[NASdaq]

With current mad fees that may receive even more than before. However, it will decline and profit will be lower. They get the same 65k price few days before 6.5 block reward and now price is the same but reward is 2 times lower

[mk4]

Historically that's how mining has been sustained business-wise. The thing is, that's with the assumption that it's guaranteed for Bitcoin to just go up in price; and at some point in time in the future, bitcoin would stop having those multipliers simply because the marketcap would be too high already.

[PrivacyG]

How do you figure the value of bitcoin to at least double with every new cycle? No one can predict that.

Why would a Miner continue to use their equipment for Bitcoin Mining if the value of the reward gets cut in half every four years?  Even if Bitcoin increases by only 50 percent every Halving and the Mining costs stay the same, it would still make no sense business wise.

OP.  I remember there was some body here explaining how the price of Bitcoin is generally around the costs of Mining.  Some times with a premium.  Some times with a small loss.  You need to remember that Mining is a business now, unlike the beginnings of Bitcoin.  Some entrepreneurs build huge Mining farms worth many MILLIONS of Dollars.  No body would do this if it was not worth the financial effort.

-----

that's with the assumption that it's guaranteed for Bitcoin to just go up in price; and at some point in time in the future, bitcoin would stop having those multipliers simply because the marketcap would be too high already.

Ironically, it is an interesting coincidence that Bitcoin touches an incredible Market Cap while Fiat keeps losing value continuously over the years.  This could easily compensate and if this is how the future looks like, Bitcoin can definitely continue to touch higher Highs even if it looks impossible right now.

[headingnorth]

How do you figure the value of bitcoin to at least double with every new cycle? No one can predict that.  

Because the bitcoin halving is an event that can absolutely be predicted to occur every 4 years, no matter what.

Every 4 years the supply of bitcoin gets cut in half - and simple economics tells us when the supply of a desirable asset is cut in half, the price of it will naturally go up.

Historically that has held true for bitcoin. The fundamentals of bitcoin are stronger than ever as long as the devs don't do something stupid like adding smart contracts
or some other nonsense features to the protocol. Bitcoin doesn't need to be anything else but a super simple and ultra-secure store of value.

It's simplicity is what makes bitcoin incredibly secure. Unlike ethereum and all the other garbage altcoins out there bitcoin has institutional grade security the same used by the big banks but with the added benefit of decentralization. The best way to destroy bitcoin is to add complexity to it which will introduce attack vectors and result in weakening its security.

Then no one will want to invest in it anymore except the same idiots who buy memecoins and NFTs because that is what bitcoin will become if you try to turn it into Ethereum or Solana.

[btc78]

As a miner if your  block reward is cut in half but the value of the reward has more than doubled from what it used to be then shouldn't that more than compensate you
for the loss in quantity you are getting post-halving? In other words the value of the reward is what matters not how much of it you receive?

It’s quite complicated actually but when you are mining bitcoin, you are also putting out money. In short there are also costs when you are mining bitcoin that needs to be covered in order for you to actually mine bitcoin.

Yes bitcoin will be doubled in price but remember that it is volatile so it’s not always gonna have high value. If you are getting only a few and the market is not as high as before then you might not be able to cover your expenses.

[peter0425]

as bitcoin becomes more popular and more users are entering the space.

Mate it is not only investors that will flock to bitcoin as it becomes even more popular. Many would also be interested to try mining and they might try to gain profit from that instead of just holding or trading.

What does this imply? Well this means double the competition for miners so if they are receiving less rewards then it would be harder to actually earn some more money.

[hugeblack]

If this is true, it happens in every cycle. For example, in the past, the price of Bitcoin was about 8k USD and the price of Bitcoin rose to more than 40k USD which is more than x2. Therefore, the price alone is not what affects miners, but rather loans, operational costs, average fees per block, Bitcoin price, electricity costs, depreciation and other details.

[EarnOnVictor]

As a miner if your  block reward is cut in half but the value of the reward has more than doubled from what it used to be then shouldn't that more than compensate you
for the loss in quantity you are getting post-halving? In other words the value of the reward is what matters not how much of it you receive?

The value of bitcoin can be expected to at least double with every new cycle, along with the number of people using bitcoin.
So miners will also be receiving at least double the volume of transactions fees as bitcoin becomes more popular and more users are entering the space.

I love the angle you brought this from but many could be confused and might even be trying to support the miners ignorantly. This is what has been emboldening them and warrants the high fees payable in every Bitcoin transaction. Miners should not just complain, they've earned enough Bitcoin in years and the price of Bitcoin will always be an encouragement for them as this is an investment that will never fail. The price has been skyrocketing and has turned some of them into millionaires in USD. This is as they continue to earn BTC in hundreds of millions of dollars yearly with both their hook and crook ideas of manipulating the Mempool to get it congested so that they gain more money in that process through fee hikes

Can you see the insane fees currently in the Mempool? It was worse shortly after halving and these guys continue to feast out of innocent people who do not have a choice but to use Bitcoin for transactions. Over time, I believe something has to be done about this, the activities and excesses of miners are too overbearing. Had it been that Satoshi did not leave the system as he/they did, it wouldn't have been like this where they've turned the entire blockchain into a full-time business in a monopolistic way.

[headingnorth]

as bitcoin becomes more popular and more users are entering the space.

Mate it is not only investors that will flock to bitcoin as it becomes even more popular. Many would also be interested to try mining and they might try to gain profit from that instead of just holding or trading.

What does this imply? Well this means double the competition for miners so if they are receiving less rewards then it would be harder to actually earn some more money.

More competition for the miners is balanced out by more users entering the space.

More miners entering the space is good for users because when you have too few miners handling very high number of transactions this will cause crazy high transaction fees
and make the network unusable for most people. But when you have more miners to soak up the demand then prices will stabilize and make it affordable to use again.

[SquirrelJulietGarden]

The value of bitcoin can be expected to at least double with every new cycle, along with the number of people using bitcoin.
So miners will also be receiving at least double the volume of transactions fees as bitcoin becomes more popular and more users are entering the space.

You have many things wrong here.

Bitcoin miners do math computation for two main tasks, finding a new block and confirming transactions for Bitcoin users.

By finishing these tasks, they will receive rewards in two types: Bitcoin block subsidy; and Bitcoin transaction fees.

Bitcoin block subsidy surely halves after a halving.

Bitcoin transaction fees is what never sure for Bitcoin miners. It can be high or low depends on time and how Bitcoin users choose to use their fee rates for transactions and demand on Bitcoin mempools.

Bitcoin price does not x2 for each past Bitcoin halvings. It increases with higher ROI than x2 but nothing to be sure it will be higher than x2 in this halving and future halvings.

Glassnode has a weekly report months ago about Ordinals' effects on Bitcoin transaction fee and income of Bitcoin miners.
Inscriptions, Mempools and Miners

Halving is only an event and between two Bitcoin blocks, before and after a halving block. Between two halvings, there are 210,000 blocks and time is about 4 years. Many things can happen during 4 years for Bitcoin adoption, mempools, demand and transaction fees.

[Stalker22]

More miners entering the space is good for users because when you have too few miners handling very high number of transactions this will cause crazy high transaction fees
and make the network unusable for most people. But when you have more miners to soak up the demand then prices will stabilize and make it affordable to use again.

No. That is not how Bitcoin mining works.  Having more miners does not directly make transaction fees go up or down.  Bitcoin has this difficulty adjustment that keeps new blocks coming at the same pace no matter how many people are mining. 

So even if there is way more miners, Bitcoin just gets harder to mine.  The number of miners doesnt do much to fees.  Fees have more to do with how congested the network is and how bad people want their transactions to go through quick.  More miners might make Bitcoin network a little more secure perhaps, but they do not drive fees.  Its about demand and congestion, not miner counts.

[KingsDen]

As a miner if your  block reward is cut in half but the value of the reward has more than doubled from what it used to be then shouldn't that more than compensate you
for the loss in quantity you are getting post-halving? In other words the value of the reward is what matters not how much of it you receive?

I have tried to understand this in a moat simplified manner and tried to relate it in real time and it's not working as you have thought. Let's say it this way;
Early miners were getting 50 BTC but the value of 1 BTC was less than a cent. If an early miner didn't convert the BTC to fiat or a stable coin till now, infact they don't even need to be mining anymore. So, the value of bitcoin appreciates over time, but there's no guarantee that past BTC is not used and the present halved reward is matching the present economic situation including power.

[Zaguru12]

More competition for the miners is balanced out by more users entering the space.

More miners entering the space is good for users because when you have too few miners handling very high number of transactions this will cause crazy high transaction fees
and make the network unusable for most people. But when you have more miners to soak up the demand then prices will stabilize and make it affordable to use again.

More miners doesn’t mean that the blocks will be mined faster, only an increased hashrate power is needed to mine the block faster and even this is usually controlled by the regular difficulty adjustment to maintain the block mining average time to be around 10 minutes; which is the default average time. The only thing an increased number of miners do is to promote decentralization. Fewer miners might be a bit centralized as they can easily agree to even censor some certain transactions.

Should Bitcoin transactions congestion continues the thing that could again ease the problem is an increase in block size limits, this will allow more transactions to be soaked into a single block than before. But still their problems greatly associated with increasing in block size is the security of the network, it will become less secure than it was before

[adaseb]

One thing you are forgetting is the increasing difficulty. So a higher price but halved block reward might be more profitable but don’t forget that with a higher price, the difficulty will keep increasing.

Eventually you will need to switch over your miners to the next generation which is more efficient. There is also your cost of electricity and area to host the miners. It’s not an easy calculation to make. Most miners made this calculation probably 6-12 months ago when they knew of the upcoming halving.

[franky1]

bitcoin VALUE sits way below bitcoin PRICE
much like PREMIUM(ATH) sits above and becomes a periods top of a period

the best way to figure things out is take any 6-24month period. calculate the average hashrate of that period.
then look at the most efficient hardware of same period. and then look at the most rational electric cost.. (eg $0.04/kwh)

using the hashrate average divide that by the hashrate of an asic to calculate the number of asics that would be on the network to achieve average hashrate
calculate the hardware costs of those asics and divide it down by 2 years lifecycle of hardware.(105k block) to get a hardware cost per block. then divide by the reward amount per block to get a hardware cost per btc

then using the same number of asics calculate the electric per hour /6/reward per block to get a electric cost per btc
add electric+hardware to get a rational efficiency mining cost per btc

yes some countries have residential electric of $0.12, £0.30($0.37) and pacific islands can be upto $0.50/kwh
but with most efficient and rational underlying low electric cost becomes its own underlying support value cost. which not many if any will want to sell below if they could

once you have this efficient underlying value support and then compare it to price.. you will see 6 months ago value was $25k and market tested this
and PRICE moved upto $75k meaning a 3x, so double profit.
and now with halving its still means the market is above the new value efficiency even after the halving, even with higher hashrate

[avikz]

As a miner if your  block reward is cut in half but the value of the reward has more than doubled from what it used to be then shouldn't that more than compensate you
for the loss in quantity you are getting post-halving? In other words the value of the reward is what matters not how much of it you receive?

The value of bitcoin can be expected to at least double with every new cycle, along with the number of people using bitcoin.
So miners will also be receiving at least double the volume of transactions fees as bitcoin becomes more popular and more users are entering the space.

The higher value of bitcoin will surely compensate the miners after each halving. However, translation fees are subjective. If the netwrok becomes busy, it will charge higher transaction fees and vice versa. If you look at the current situation, you will see the network is super busy with nonsensical things like Oridinals/BRC20 tokens. That's why people are forced to pay higher transaction fees. But if these Ordinals are completely banned from the network, the transaction fees will come down.

In order to keep Bitcoin alive, the transaction fees need to be lowered. Miners can be compensated by the bitcoin value. But higher transaction fees is a actually suicidal for Bitcoin to be honest!

[davis196]

As a miner if your  block reward is cut in half but the value of the reward has more than doubled from what it used to be then shouldn't that more than compensate you
for the loss in quantity you are getting post-halving? In other words the value of the reward is what matters not how much of it you receive?

The value of bitcoin can be expected to at least double with every new cycle, along with the number of people using bitcoin.
So miners will also be receiving at least double the volume of transactions fees as bitcoin becomes more popular and more users are entering the space.

I can agree with one thing. With the reduction of mining rewards, the process of mining Bitcoins becomes less and less profitable for the smaller miners, so they leave the mining industry and only the "big boys" remain. Having higher BTC price doesn't necessarily mean that the transaction fees will be higher. Two weeks ago, the Bitcoin price was around sixty five thousand dollars and the average fee on the blockchain was less than 3 euro. The quantity of transactions is what determines the Bitcoin price, so the mass adoption of BTC could lead to bigger amount of transactions. Off-chain solutions like the Lighting Network failed to gain mass adoption, while useless on-chain features like ordinals and runes helped for congesting the BTC blockchain.

[odolvlobo]

Every 4 years the supply of bitcoin gets cut in half - and simple economics tells us when the supply of a desirable asset is cut in half, the price of it will naturally go up.

You are promoting a common misconception. The supply is never cut in half. The supply is always increasing toward 21 million BTC. It is the production that is halved, and while there is a Law of Supply, there is no equivalent Law of Production.

The value of bitcoin can be expected to at least double with every new cycle, along with the number of people using bitcoin.

One might expect the value of BTC to double every cycle because it has more than doubled every cycle in the past, but there is nothing guaranteeing that it will. There are coins that have not doubled after a halving, and there are coins that are now practically worthless despite their halvings.

• While the price of BCH has doubled ($673) from its previous halving ($252), it spent most of the cycle at about half of the price ($120).
• The price of LTC was about $90 at both its last halving and its previous halving.
• XVG has had 8 halvings in the last 4 years, but it's price only doubled in that time from $0.005 to $0.010.