Bitcoin mining revenue will become entirely provided by transaction fees as block rewards rapidly fade away.
There isn't infinite demand for Bitcoin block space. Higher transaction fees push people to 2nd layers (Lightning), side chains (Liquid) or custodial exchanges, etc.
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BTC price went up far faster than block rewards went down, creating a massive amount of revenue for miners in the short term.
The price would have to double every 4 years simply to keep providing the same block reward revenue. Price would need to go up faster for it to increase.
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The economics of this don't support the kind of paperclip maximizer that it's portrayed to be at all. I think it's likely that the mining revenue stays about the same going forward i.e. price doubles about every ~4 years and people avoid paying orders of magnitudes more in fees.
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More cost efficient miners keep driving out the others, as always. If the cheapest power is subsidized coal (often the case now), they'll use that. If the cheapest approach is running your own power plants, they'll do that. If wind is cheaper than coal, they'll use wind power.
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That's the basic economics of it. Mining hardware gets massively more efficient too, so old mining ASICs lose relevance over time.
People won't pay 1000+ USD worth of BTC for each payment so clearly mass adoption would have to be via 2nd layers, side chains, etc. not on-chain.
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Do you really think people will pay (inflation adjusted) 1000 USD, 10000 USD, etc. for a single Bitcoin transaction?
If electricity wasn't so heavily subsidized where most mining happens, there would be far less already. Mining scales up/down to what block rewards + fees fund.
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10x more mining or 1/10 as much mining wouldn't change the throughput. Mining difficulty adjusts to keep it the same.
It's the security factor for choosing the valid path of blocks (security against double spends / disruption). Every node enforces the other rules themselves.
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The fees don't determine the trust people put in bitcoin, the scarcity multiplied with adoption rate does. There are only 21 million bitcoin and of which 18 million plus distributed and quite a few lost for ever. Get yours when still cheap.
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The fees combined with the decreasing block rewards determine the total revenue split amongst the miners. It's the amount of money put into securing the network against double spends and disruption via the PoW security level. That part of the security will become based on fees.
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The fees are balanced between layer2 solutions and the biweekly difficulty adjustment. It's the limited money supply times adoption rate that determines the value people will put in the first true proof of work asset class you can memorize the key of. It will eat all others.
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When mining (fees + reward lottery) finally becomes fees only, nothing really changes. The mining reward naturally converges towards energy cost plus hardware write offs plus a bit for the effort and risk.
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