> you need that much capital flowing in to maintain the market price
There's something off about the argument that you're making and I think it's that you have cause and effect backwards.
You keep phrasing this as if mining moves first before price, and investments in hardware are necessary to sustain high prices. But the reality is that high prices come first and incentivize investment. That investment is not required for Bitcoin to continue to operate, it's just an expected effect for a given cause.
Hmm. I’m not 100% sure I follow so I’ll restate and see if we can go from there. I’m saying:
1. The market price is set by people deciding to buy bitcoin, and
2. Bitcoin miners will invest in equipment and energy up to whatever the market price is
3. Thus, at a market price of X, at current mining rates, the miners will have costs roughly equal to 6.5 * 6 * 24 * X per day, or C
4. So to maintain a given market price, $C must enter the market at any given time, to covet the costs of the miners.
5. If less than the miners costs enters the market in money, the price will drop and miners will exit the market until their new cost structure is in equilibrium with the new price.
In other words, as new coin at a given break even point enters the market, that dictates how much new capital must enter the market to keep prices steady. If more capital than that enters prices rise, if less then they fall.
This is so because unusually in the bitcoin network marginal cost equals average cost as the network adjusts difficulty based on miner effort. So I think this makes things kind of backwards and breaks our intuitions.
There's something off about the argument that you're making and I think it's that you have cause and effect backwards.
You keep phrasing this as if mining moves first before price, and investments in hardware are necessary to sustain high prices. But the reality is that high prices come first and incentivize investment. That investment is not required for Bitcoin to continue to operate, it's just an expected effect for a given cause.