Bitcoin the industry is different than Bitcoin the network or Bitcoin the money
Since blocks are not a product or service, there's no sales pipeline, nor a moat a producer has to protect margin. It's completely arbitrage-based.
Given the perfect arbitrage for lack of moat or sales pipeline, the non-monetary reasons to mine drive that arb negative. Altruism, waste heat, ideology, provenance premium all add competition to production costs.
That's not to say miners will always operate at a loss, just the reward will have to come from somewhere other than arb we associate with mining today. The industry must and will change.
Focusing on industrial scale and not just plebs running space heaters, the best example is provenance coins being worth more than "used" coins to institutions. If it cost 100k to mine 95k worth of coin, but an institution will pay 105k for the provenance coin, the miner is still up 5k/coin despite mining at a loss.
If a greenhouse spends 100k to mine 95k worth of coin, but saves 10k on their heating bill, they're still up 5k/coin despite mining at a loss.
We can then scale these principles to the pleb with space/water heaters, or to national banks of sovereign countries that don't want foreign countries in complete control of the ledger they use for the world reserve currency. They may mine at substantial loss simply to protect their holdings because they assign it an insurance value beyond the mine value of the coin.
I think it's healthy that fees are at the lower bound, I want to see less industrial mining, more decentralized mining... if fee's were higher it'd favor at-scale mining who can better arbitrage it.
Bitcoin the industry is different than Bitcoin the network or Bitcoin the money
Since blocks are not a product or service, there's no sales pipeline, nor a moat a producer has to protect margin. It's completely arbitrage-based.
Given the perfect arbitrage for lack of moat or sales pipeline, the non-monetary reasons to mine drive that arb negative. Altruism, waste heat, ideology, provenance premium all add competition to production costs.
That's not to say miners will always operate at a loss, just the reward will have to come from somewhere other than arb we associate with mining today. The industry must and will change.
Focusing on industrial scale and not just plebs running space heaters, the best example is provenance coins being worth more than "used" coins to institutions. If it cost 100k to mine 95k worth of coin, but an institution will pay 105k for the provenance coin, the miner is still up 5k/coin despite mining at a loss.
If a greenhouse spends 100k to mine 95k worth of coin, but saves 10k on their heating bill, they're still up 5k/coin despite mining at a loss.
We can then scale these principles to the pleb with space/water heaters, or to national banks of sovereign countries that don't want foreign countries in complete control of the ledger they use for the world reserve currency. They may mine at substantial loss simply to protect their holdings because they assign it an insurance value beyond the mine value of the coin.
I think it's healthy that fees are at the lower bound, I want to see less industrial mining, more decentralized mining... if fee's were higher it'd favor at-scale mining who can better arbitrage it.