State mining

14 186
Avatar for ErdoganTalk
4 years ago (Last updated: 3 years ago)

This goes for all mined coins.

A state (or government) might favour the idea of mining bitcoin, because they have seen some temporal high profits.

This is not new in history. Finding gold and capturing mines have been something kings have wanted. Example: The spanish conquistadors in south america. Why have some countries relied on gold as money, others with silver? Because the king had access to (could confiscate) mines of the respective type. A silver example is norway in northern erurope, some unlucky farmers sons found a bundle of string of silver, got arrested (why would some poor peasant be in possession of silver? Where is the source of funds?) and the land was confiscated and a mine established. But the silver mine, in it's 300 years of operation, never produced a consistent profit, only some lucky years where they found large bundles (see below about production cost of sound money). Even copper, which is not very good money and have never been. Imagine paying with copper, the example from sweden is large coins like plates, very impractical due to the amount of copper you had to transport to pay. The explanation is that the swedish king did not have easy access to rich gold or silver mines. (They were big in robbing neighboring kings, but that is another story).

Now to the production cost of sound money: It is simple, any new unit of sound money has a production cost in the long run of the price of that unit in the market, less a small profit comparable to other businesses. In short, mining money is not more profitable than growing flowers, cutting someones hair, or serving beer. But the kings did not know that! They heard about some mineral finding and imagined large profits. But no, there is nothing special about mining money, and the non voluntary nature of the mines they built, made them in fact less profitable than the average social profit.

But they did not know, the same way as the current kings (republican or democratic political leaders). Or worse, they didn't care or even worse, they liked the violence. They chartered ships (in the colonial era) with the message: Whatever you do (I give you authority (of which they had none to give)), come back with gold. Give me gold. They used that unethically acquired money to kill and steal from neighboring kings and princes, which easily could be their close relatives.

Bitcoin (all mined coins) tries to mimic that most important property of gold, silver and copper, with the hashing difficulty algorithm self regulating to make the mining cost equal to the coin price less a reasonable profit.

This is the light in which we have to view the interest or effort by some states to mine cryptos. Recently in Iran, but earlier in Kazakhstan.

The essence is that due to the nature of sound money, it is not more profitable than any other business, and to the degree that they can profit on it, it depends on violence, making the operation itself value-destructive. One way is to give themselves a privilege in the form of free electricity or zero tariff import of equipment, while other people have to pay the cost of energy plus maybe a tax on energy, and import tariffs. It is just a way of stealing value from other people in the place of their reign.

Therefore, state mining is neither a threat to bitcoin nor an advantage to bitcoin. It is just confusion on the part of the government people, plus the usual parasitic behavior you can expect from them.

37
$ 7.36
$ 7.25 from @TheRandomRewarder
$ 0.05 from @Ostina1
$ 0.05 from @Sujana
+ 1
Avatar for ErdoganTalk
4 years ago (Last updated: 3 years ago)

Comments

sir I learn from each of your articles. Thank you so much for explaining that.. I really Like your Every post 💕

$ 0.00
3 years ago

I am an amateur in cryptocurrency mining. I was just doing something salty doing a fee.

$ 0.00
3 years ago

Good information...

$ 0.00
3 years ago

Great article...

$ 0.00
3 years ago

but still bitcoin has less blockchain at it abused the transaction fee policy. the holders have suffer in this kind of system.

$ 0.00
4 years ago

i heard about mining cryptocurencies but i never use it for now,i hope i will one day when i will have enough crypto

$ 0.00
4 years ago

Sir, it has been more than a week now that no article is being given tips in my profile. I don't know what the problem is. You can check out my profile articles if you want. What is the quality of writing an article. After writing an article with so much effort, we edit it and then add photos and publish it, but if we don't get any response, then we are not interested in writing. So kindly can you see this for a while? I would have benefited a lot.

$ 0.00
4 years ago

a long time ago i used mining bitcoin ,that time was profitable .Thanks for informative article

$ 0.00
4 years ago

Great dear I have subscribed you from Pakistan

$ 0.00
4 years ago

I really like to read your article. It is an article with a lot of important information and I like it even more. Thanks for shearing.

$ 0.00
4 years ago

I really like to read your article. It is an article with a lot of important information and I like it even more. Two months later you gave us a new exclusive article. Thank you sir.💐💞💐

$ 0.00
4 years ago

I got such a beautiful post in the morning. Thank you boss.

$ 0.00
4 years ago

Good article sir, thanks for sharing 😊

$ 0.00
4 years ago

I have just published this article, by converting into Bengali language. https://read.cash/@IrfanSagor/state-mining-rajz-khni-d71322a1 I hope it will be very helpful for Bangladeshi.. Thank you.

$ 0.20
4 years ago