12 sats \ 7 replies \ @grayruby 6 Sep 2023 \ on: Tail Emissions Are A Terrible Idea bitcoin
If fees are not high enough, I will happily mine at a loss to help secure the network. Similar to paying for insurance for your house. It's similar to a tail emission but more palatable than changing the supply of the fixed supply global reserve asset.
Get a couple hundred million people, some large institutional holders, maybe even governments across the world willing to insure their most valued asset by protecting the network, add in block reward until 2140, fees, and whatever other revenue large scale mining can generate (grid balancing, methane capture etc) and you are good to go until humans find a way to screw it up.
I think about this too and I don't think it should be dismissed as a possibility.
But rather than thinking of it as "mining at a loss" it might be better to go back to first principles and think of it as spending energy to secure the monetary network.
Thinking of it outside the fiat price helps to ground the conversation in terms of what's actually happening rather than trying to speculate on some future price in dollars.
On our path to hyperbitcoinization I expect one of the first things to get repriced in Bitcoin will be energy. Energy companies are the backbone of the economy and there's a direct relationship between energy producers and Bitcoin miners.
When energy producers mine Bitcoin it's not a "cost". It's actually an additional source of revenue and reduces their marginal cost making them more profitable and more competitive. They have a way to monetize excess energy and stabalize the grid.
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Your mining at a loss may not be enough if others don't.
We have a collective goal to secure the network, but the individual incentives don't align with it, because whoever mines at a loss secures the network not only for themselves but also for those who don't mine at a loss. Why would I make an individual contribution of $100 to a greater common good to get an individual benefit of $0.0000001?
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This is fair but I go back to the insurance example. I buy insurance on my house and buying that insurance also insures others houses, as does their purchase of insurance help to insure mine. It's hard for me to believe that people will have large portions of their wealth tied into bitcoin because of it's scarcity and fixed supply and will a) accept tail emissions b) not be willing to insure their wealth.
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Sorry, how does your insurance insure others' houses? My insurance only insures mine.
Even if yours covers others' houses, it insures yours more than others. And you're not insuring the entire world.
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When I pay into an insurance product I am paying into a pool of capital that pays out when the 1/10000th house burns down. My capital is insuring that if that house is mine I am covered but if it's yours, you are covered as well even if mine didn't burn down. If I had to pay to insure only my own home, even if a catastrophic outcome is unlikely the premiums and deductibles would be 10x what I currently pay.
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I am not suggesting this is a perfect analogy but I think looking at a framework that is similar to an insurance product is more palatable than tail emissions. No one knows what the revenue profile of miners looks like far into the future, are they getting paid to balance grids, capture methane, what are fees, what has happened with integration into appliances and industrial machinery where no excess energy needs to be used to mine etc.
I am not speculating on any of this just on the idea if what comes out of all of that is insufficient at securing the network then paying to mine like you pay to insure your house is more palatable than tail emissions even if they are effectively the same.
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maybe even governments across the world willing...
...to mine at loss :)
Read about Prisoner's Dilemma, then :)
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