Why does the marginal cost of mining Bitcoin increase over time?

1 answers

• Tiara WilliamsJun 28, 2024 · a year ago
  The marginal cost of mining Bitcoin increases over time because of the limited supply and increasing demand for the cryptocurrency. As more people become interested in Bitcoin and start mining, the competition for mining rewards intensifies. Miners need to invest in better hardware and more electricity to stay competitive, which drives up the marginal cost. Additionally, the diminishing block rewards and the increasing difficulty of mining contribute to the rising marginal cost. Overall, the increasing marginal cost of mining Bitcoin is a natural consequence of its growing popularity and limited supply.
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