Bitcoin “Mining” Isn’t Mining At All (Shutterstock) If I have a brokerage account at Interactive Brokers or thinkorswim (which is now part of TD Ameritrade) or any other broker allows me to buy and sell futures, I can make Brent Crude into “money” as easily as I can turn Bitcoin into “money”. Purists will argue that isn’t the case because of the blockchain technology driving Bitcoin, and there is some truth to that, but for all intents and purposes, it isn’t much harder for me to link a brokerage account to a money market account to a debit account or credit account and turn my “asset of choice” into “money”. While I wouldn’t have blockchain technology and the alleged “anonymity” of Bitcoin (which seems to have been reduced now that taxing authorities are hunting it down), but I would have incredibly strong protection against fraud and manipulation.
But today, I am less worried about whether people treat Crypto as a currency and want to focus on the mining aspect. In general, most other things that are mined or pumped out of the ground have a degree of separation between the value and use of the commodity and mining process.
If the price of oil drops, drilling stops until it is profitable to drill again. If the price of copper drops, mining stops until it is profitable to mine again.
If the price of natural gas drops, fracking stops until it is profitable to frack again. If the price of Bitcoin drops, it is impossible for mining to stop.
The mining is what Bitcoin is. The mining is not a separate function. It doesn’t just drive supply and demand, mining is a requirement for Bitcoin to be of any value at all. In anything else that I can think of, a reduction in mining will decrease supply of an asset and support the price. Read more from forbes.com…
thumbnail courtesy of forbes.com