I Like Big Blocks, BitcoinSV Closing in on Sustainablility

Here is Block #725511Why does this matter? Bitcoin started with a mining subsidy. The coins are issued as a reward for each block mined. Eventually, these rewards become too small to justify mining (and eventually go to zero because there's a fixed amount of coins). Either the price or transactions must rise to make it a viable long-term operation. BTC went the "digital gold" route. It survives on high prices. With the block reward currently 6.25, a miner can expect about $250,000 if they solo mine a block. BitcoinSV goes the opposite route, aiming for microtransactions. The 3.8 GB block above had 188,101 transactions and generated 9 BSV in fees at an average of about half-a-cent USD, exceeding the mining subsidy. Since BSV is currently around $100, that is only $900, plus the 6.25 reward for $1525 total. Miners can switch seamlessly between chains so the profitability of all the chains is similar.

However, the fact that BSV has generated blocks with fees that exceed the reward means it can become a sustainable business for miners. I was turned off by mining in part because I wondered what happens when the speculative bubble pops. Putting up millions in capital to possibly obtain an asset at some future date at some unknown price is less attractive than a business with growing, reliable profits. Or less attractive than putting millions into the asset itself if expecting a price increase.

A consistently growing block fee puts a floor on the mining reward and lowers revenue risk for miners, particularly if some fees are fiat-based because that will further reduce volatility. Mining revenue becomes more predictable from a consistent stream of fees. This will attract low time preference miners who will make longer-term investments in the chain, versus the high time preference miners who are engaged in speculation on price. When a chain can consistently exceed the block reward in fees, it becomes a self-sustaining enterprise and has a viable shot at become once of the few winners that emerge from the start-up jungle.