# Last edited on 2015-02-16 21:29:19 by stolfilocal
# NOT POSTED

If mining continues to be a free market, the incentives for individual miners will push them to increase their hashpower, which will increase everybody's costs.

Let's assume that the fees are a fixed percentage of the outut volume (with a small flat fee to discourage spamming, as now).  Let {h_i} be the hash power (hashes/sec) of active miner {i}, {H} be the total hashpower of all active miners {H = \sum_i h_i}. Let {V(p)} be the traffic volume (in USD/day) that would exist if the fee percentage was set to {p}.   Let {r} be the total miner revenue from block rewards (also in USD/day) 

The raw revenue (USD/day) for a miner {i} will then be {(h_i/H)*(r + p*V(p))}.  His costs (USD/day) will be {C*h_i}, for some constant {C} ((USD/day) /(hashes/sec)) that includes the amortized equipment costs.  So his net revenue will be {h_i*((r + p*V(p))/H - C)}.  If he increases his hashpower {h} by a small amount (which also increases {H} by the same amount), his net revenue will increase proportionally to  {(1 - h_i/H)*(r + p*V(p))/H - C}.  Thus he is motivated to adjust his share {h_i/H} until {(1 - h_i/H)*(r + p*V(p))/H = C} (due to the corresponding changes in {H}). 

So what?