What Happened at the Satoshi Roundtable
Why should I trust what this guy is saying when he has such egregious misunderstandings about Bitcoin?  I expected better from the CEO of Coinbase.  The worst one was this:<p>&gt; The next block reward halving is coming up in July. Let’s say that miners on average are able to mine a coin for $250 (I don’t know the exact number, so this is a guess). After the halving in July their cost to mine a coin will double to $500. If the bitcoin price stays around $425, it will be unprofitable for a number of miners to continue mining.<p>You can&#x27;t just guess about these things!  You have to do the math!  There are two components to mining costs: The sunk costs (the actual price of the mining equipment), and the oncoming costs (electricity).  Once you&#x27;ve already paid the sunk costs, and the miners have, tautologically so, to get to the current network hashrate, you won&#x27;t turn your miners off unless their yield falls below the cost of electricity.<p>I&#x27;ve done some calculations and, with the current most-efficient generation of ASIC Bitcoin miners, you generate around $0.25 per kWh.  So with the halvening, you&#x27;ll be generating around $0.12 per kWh.  But guess what most miners are currently paying for electricity?  Around $0.02 per kWh (yes, they&#x27;re locating their mining operations like Google locates data centers).  So while some inefficient miners on the fringes may turn on, the halvening isn&#x27;t going to come close to causing the majority of miners to become unprofitable.  So you&#x27;re unlikely to see a big drop in hashrate.<p>The most ridiculous part of the catastrophist argument is that we <i>already</i> had a halvening from 50 BTC to 25 BTC, and nothing changed!  The hashrate didn&#x27;t go down appreciably and block finding time didn&#x27;t suddenly jump up.  There was nothing different about that time than now; both are governed by the simple economics of mining profitability, which tends to stay at around the same level above cost -- that is to say there are economic self-balancing forces at work that cause miners to enter&#x2F;leave the system to keep the hashrate adjusted relative to the mining returns over the long term.<p>So anyone proposing a catastrophe over this halvening has an uphill battle to climb of explaining why it&#x27;s different than the last one when nothing happened, and that hasn&#x27;t been done so far.