>In this more accurate representation, we have miners pulling money out of the pot in two ways: transaction fees, and the selling of their Bitcoin mining rewards. The latter is harmful to BTC’s value in two ways. It dilutes the circulating supply of BTC which decreases its value, and it pulls money from the pot to cover energy costs. A majority portion of the money miners are pulling from the system is being burned forever in the form of energy costs, meaning it has no way of ever re-entering the system.

"It dilutes the circulating supply of BTC which decreases its value" isn't necessarily true. Although a lot of Bitcoiners say an increased supply decreases value and that a decreased supply increases the value, that's assuming demand stays constant. If demand rises with an increase in supply then the price may remain the same or increase (if the demand was high enough), and likewise if the demand lowered with a decrease in supply then the price may remain the same or decrease (depending on how low the demand gets). The author mentions supply and demand later in their post but fails to reference it here.

>If the network is valued at $568B, but costs $7.125B/year or more to secure, that’s a pretty big leak for something that is supposed to preserve value.

It sounds like the author is trying to say that selling is a "leak" of value. This premise doesn't sound right to me considering that a miner has to sell their Bitcoin to someone who is buying in, and an exchange of Bitcoin shouldn't be seen as value leaving the system. I think the word "leaky" also doesn't help convey the overall message of the post which is that Bitcoin cannot be a store of value because the mining that secures the network is unsustainable over time and the fees will not be enough to cover this unsustainable cost ("mining is unsustainable long-term unless it is subsidized by transaction fees, which will not exist because transacting on Bitcoin is slow and expensive").

>According to Glassnode, (as of April 2022) ~63% of BTC’s supply had not moved in over a year. So it looks like our denominator is actually closer to 0.37 * $568B = $210B

It doesn't make sense to claim that the value of the network decreases by the proportion of users who don't move their Bitcoin within a year.

>So now imagine two Michael Saylor whales are just dumping ~700 BTC on the market every day or around 250,000 BTC/year. That’s essentially the energy cost of running the Bitcoin network. Who pays for that cost? Not the miners. They are profitable. They pass it onto the Bitcoin holders. Bitcoin holders pay for it in the decreased value of Bitcoin caused by this energy expense.

The miners shouldn't be assumed to remain profitable if Saylor is dumping Bitcoin. Assuming demand is consistent and the supply of Bitcoin rises, then that Bitcoin dump would negatively affect the order books and therefore the price and the amount of money a miner would get for every Bitcoin sold.

>Bitcoin was originally designed to be peer-to-peer cash, then when everyone realized it doesn’t scale, the store-of-value narrative emerged.

This is false, the store-of-value narrative didn't "emerge". Satoshi wanted Bitcoin to be used for payments, yes, but that wouldn't restrict its usage to only be for payments. Satoshi mentioned in the bitcointalk.org forums that the currency would be "deflationary" (implying it can act as a store of value as well): https://bitcointalk.org/index.php?topic=12.msg62#msg62

>What about the lightning network? I can do a separate write-up on the the lightning network, but it would simply be a more poorly written version of this article: ...

The linked article also makes a lot of assumptions about how big centralized hubs will get and ignores potential future solutions for smaller hubs of centralization and locality. They also attack the known fundamental problems with Lightning network scaling while ignoring the advances made for things like liquidity, etc.

>Would you like to know how else I know Bitcoin is not thermodynamically backed? If you could remove the high energy consumption without sacrificing security or decentralization, it would be a net positive for Bitcoin.

I agree with this, energy consumption is not the end goal but it is the only plausible way to achieve the goals Bitcoin desires. POW creates an independently verifiable ledger based off something that can't be replicated easily by the parties that secure the network (which other algos like POS can't pride themselves on).

My conclusion: While I believe the author has a point, I also believe that the mining model is sustainable. In my opinion the way forward is to build numerous decentralized protocols on top of the Bitcoin blockchain and shift the Bitcoin blockchain's primary source of transaction traffic as layer 2 settlements. This will help decouple the value of Bitcoin as an asset with the number of transactions on the blockchain and will still allow demand for on-chain transactions to grow and meet the supply-demand curve.