125 sats \ 4 replies \ @Scroogey 17 Nov 2022 \ on: Please help me understanding the maths behind Bitcoin, what am I missing? bitcoin
If the price sinks, some miners will stop mining. Not all of them at once, but some of those with higher energy costs. Now the revenue is shared among fewer miners, and those that remain become (barely) profitable again.
It's a self-correcting balance.
If the price falls, less energy is used to secure the network. But there will be miners, and they will profit.
And with some miners stop mining the difficulty of the algorithm will decrease requiring even less energy.
Well said. Self-Correcting Balance. So beautiful.
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Thank you for the explanation.
Why if the price falls, less energy is used to secure the network?
Don't miners still need increasing power in relation to the increasing mining difficulty regardless of the number of miners in the network?
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If price falls and some miners stop mining, the hash rate sinks. This causes the difficulty to adjust down, so the lower hash rate still produces one block every ten minutes on average.
Now less energy is used to secure the network, because some miners' gear is turned off.
When the price increases, hash rate and difficulty increase. When the price decreases, hash rate and difficulty decrease. Until equilibrium is reached again.
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I see, this makes perfect sense. Thank you so much for the explanation.
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