This is a strange assertion to me that “mining remains profitable at any difficulty” and I wonder how Voskuil would defend it.
Here is what Satoshi said about the “difficulty adjustment algorithm”:
The price of any commodity tends to gravitate toward the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price.
So if the price tends towards the cost then we should be expecting an asymptotically reduced profit where at the end or long run the profit goes to zero.
And at the same time if there is profit to be made (ie at any difficulty) then why should not more mining power be employed (and especially by the leading miner).
I’m not entirely sure that Voskuil can show or give a reasonable argument that there should always be profits to be made in bitcoin mining. To the contrary I think it seems more reasonable to suggest that bitcoin mining shouldn’t be seen to be very profitable as the system bootstraps and the market demand for bitcoin starts to be satiated.
Of course in the early game when price swells can dramatically out run the difficulty adjustment then there would be a gold rush like incentive and then I think we would expect the leading mining giants to have a very quick exit plan as the longer run scenario plays out.
This would be interesting if true I think because it would suggest the long term net mining cost trend would not be perpetually or dramatically increasing but either more so stabilizing towards an equilibrium or even decreasing (secularly) over time.
