Jack Dorsey: Block is officially building an 'open Bitcoin mining system'
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Bitcoin mining is one of the weirdest economics situations around. Each new miner produces zero extra value for processing transactions, but it reduces the payout for every other miner by a proportional amount and it consumes incrementally more energy in the process.
Why must Block focus on the worst thing about Bitcoin and create a large scale effort to contribute to making it consume even more energy while doing nothing extra for Bitcoin?
There is an almost market assumption that the US will absorb these excesses. In a scenario where the US curbs Bitcoin mining alongside other countries with major sources of large and cheap electricity supply there needs to be an offset, hence BLOCK’s plans.
It makes complete sense to me. In the event of large scale mining bans BTC difficulty would adjust so its total mining output / energy use could actually be lower with higher profitability depending on BTC prices. An affordable low-scale miner helps to ensure BTC’s long-term viability of its hash rate which contributes to its security etc alongside decentralising the network.
I think the bigger issues right now are that there are substantial arguments to be made that there is an everything bubble going on right now and crypto is so immature relative to modern financial markets especially in data feeds and analytics. There are substantial amounts of capital invested in alt coins and Coinmarketcap and Coingecko aren’t even listing the true total global market caps of total crypto market.
CMC list it as roughly $2trn vs Coingecko’s $2.1trn but they have listed thousands of other coins where there are liquidity and they have excluded them from the total. These are coins with daily volumes in excess of $1m all the way down to >$100k.
Once you add the market cap of these coins the total crypto market is roughly around $2.4 - $2.5trn and that still excludes major projects with liquidity that are active but currently unlisted on CMC and Coingecko. The whole data aggregation part of crypto is a complete mess and amateurish.
Imagine people trying to model analytics on a total crypto market cap of $2trn vs $2.5trn (reality) a 25% error rate just because Coinmarketcap has added these coins but has arbitrarily chosen not to add them to the total crypto market cap. They are greyed out on the website with this message: “Self Reported Market Cap The CMC team has not verified the project’s market cap.”