Topic: 2 equilbria at work, btc prices must go upward as a result of competition. (Read 783 times)

Well then, you, sir, are not a rational economic actor! 


(this is why neo-classical theory is not the end-all-be-all of econ)

And he was dead before Volume III was published.. poor guy..

Das Kapital Vol. II is so under-appreciated.

There is classical economic competition at work, only at a much faster pace than has been observed.

In order for bitcoin mining to have some profitable margin, the dollar price MUST increase to maintain that margin giving an accelerating difficulty in mining (accelerated by increase computing power being added to the network). Otherwise, it would become more profitable to buy a bitcoin outright than to mine for one. -- there are to equilibria at work -- one in the supply/demand side in the open marketplace where you can buy openly, but if the price goes too high as a result, mining then becomes more profitable keeping it afloat at an even higher level.. and so on.
In the phase where mining is most profitable, there will be an acceleration in the technological advance making mining faster and more efficient. Prices will go down for mining equipment, but as a consequence more and more machines will enter the mining force creating more computing power in the network which drives up difficulty in mining the next bitcoin. At some point miners skate the edge of profitability and it becomes prohibitive for a new miners to enter. New entrants thus are forced to buy a bitcoin from a seller in the marketplace. The sellers are those that were previously miners, who have inventory. The direct market buy forces will lower the supply of the sellers, and in driving the price of BTC up again will make mining profitable. And on it will go. Until the last bitcoin is mined. In which case who knows what might happen.

Ironically, Marx's (Das Kapital vol. I) theory of money is very congruous to what is going on right now..