21 sats \ 3 replies \ @tbonesteaks 16 May 2022 \ parent \ on: The problem with bitcoin miners [seen on Hacker News] bitcoin
This top comment seems like it was posted mostly in good faith and the arbitrage angle was one I haven’t thought of before. But, the conclusion seems to be that governments are going to shut down mining because it uses too much electricity? Outside of that rather aggressive measure, the arbitrage seems like a good thing, or am I missing some nuance in what he is positing?
I think the overall posting confuses the point of "arbitrage" and "value-added enhancement".
"Arbitrage" would be taking one asset (e.g bitcoin) and transferring it from one market to another (without any modification to the bitcoin itself) to make some profit due to market inefficiency.
"Value-added Enhancement" is the work (e.g electricity, computational power) that is produced to create a sellable good (e.g bitcoin).
The author incorrectly assumes that energy costs (e.g the potential energy of a bitcoin) is equal to an actual bitcoin and improperly classifies this as "arbitrage". Given that energy != bitcoin, but rather energy + computational hashes = bitcoin means that there will always be a profit-opportunity for mining companies.
My $0.02.
P.S. - Like the original HN poster mentioned, I am also an idiot.
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That top comment also totally ignores the fact that the future of BTC is dynamic and uncertain. What's going to happen when block rewards are from tx fees only? Nobody knows. But that author seems content to extrapolate.
All in all I felt that top comment was a straw-man type of approach.
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As a fellow idiot, that was a super helpful response. Thank you.
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