# Last edited on 2015-08-11 20:37:12 by stolfilocal
# NOT POSTED YET

**TLDR:** The user base is too small to justify the current mining industry.

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The total revenue of the bitcoin mining industry is the ~3600 BTC that they mine per day, which is worth about ~1 million US dollars per day.  

Sometime next year this revenue is bound to drop by half.  There is a risk that a large fraction of the current hashpower will be turned off.  (Profit margins are believed to be relatively tight, after 18 months of falling BTC price and a boom in mining equipment manufacture in early 2014.)

It has been suggested that transaction fees could be increased to cover at least part of that revenue drop; either by raising the minimum fee, or by letting the network saturate so that clients who cannot wait for hours would be forced to pay higher fees.  

(At some point in the future, after multiple reward halvings, the miners will have to be supported mainly by transaction fees; so, this proposal would be a first step towards that ultimate situation.)

(Moreover, right now the miners are supported by the new investors who buy their btcoins, rather than the users who benefit from the mining.  That creates all sorts of distortions, such as companies spamming the blockchain with thousands of tiny transactions for advertising purposes. Increasing the fees would also be a small step towards fixing that economic aberration.)

However, [the current traffic](https://blockchain.info/charts/n-transactions?timespan=2year&daysAverageString=7&scale=0) is only 120'000 transactions per day.  In order to cover the 500'000 $/day, the average fee per transaction would have to be 4.25 $.  

Looking at it from another angle, [the total US dollar value moved per day](https://blockchain.info/charts/estimated-transaction-volume-usd?timespan=2year&showDataPoints=false&daysAverageString=28&show_header=true&scale=0) (excluding obvious return change outputs) has been about 50 million $/day.   To cover the 500'000 reward drop, the transaction fees would have to be about 1% of the amount moved.

Both computations are underestimates, because it is very likely that the traffic would drop a lot if transaction fees become significant.  Even a rise to 0.25 USD/tx would probably cut traffic by 80%.

Here is another way of loking at that cost. Accroding to [this table](http://bitcoinrichlist.com/charts/bitcoin-distribution-by-address?atblock=350000) as of 2015-03-30 there were about 850'000 adresses in the blockchain that have at least 0.1 BTC (~30 $) in them.  Assuming that a bitcoin user (someone who issues at least one transaction every 2-3 months) must own at least one such address(*), we conclude that there cannot be more than 850'000 users.   If the revenue drop of 500'000 USD/day had to be covered by the users, each of those users would have to pay about 0.58 $/day, or about 215 $/year.

Again, this cost would be absurd, considering that we are counting as users many people who own less than 100 $ in bitcoin.

The conclusion is that both the user base and the traffic volume are way too small to justify the