Would you care to share your Econo101 knowledge?
I'm not an economist, but nothing has convinced me yet that bitcoin is not the best form of money.
I'm not an economist, but nothing has convinced me yet that bitcoin is not the best form of money.
Are those things that can change over time? Certainly - but it hasn't happened yet.
Transaction cost is pretty low in multiple views:
- You can globally settle billions of dollars worth of bitcoin for less than 10$ [0]
- FIAT Settlements between banks is a complicated and non-auditable process, which is internationally speaking also very slow
- You can build layers on top of bitcoin, i.e. the Lightning Network or liquid, which reduces transaction costs and time by a lot (sub cent range in the lightning network)
Energy usage is not tied to transaction throughput. It is vital to be very high in the future, as it secures this global and auditable settlement network. Mining is a very competitive business. Renewable and unused energy IS the cheapest energy available (without govt. subsidies), thus the most competitive miners will use them. Mining also "subsidizes" research in cheap energy, as it gives you a competitive advantage.
[0] https://twitter.com/CoreFeeHelper/status/1366787351985287168
(1) Most people don't settle on large volumes (thats typically banks/states/institutionals) so small volumes have a high cost percentage making it not a good daily driver. The fact that there is any transaction cost makes it challenging to work with as a daily money vehicle for consumers.
(2) It requires energy to exist and keep a ledger, it also requires energy to mine. Your comment on renewable energy isn't accurate sadly and unused energy works only if you can get access to it which isn't universally available. In some jurisdictions renewable energy beats on price but this is largely on huge projects that are bid into utility grids (At least in North America). It will get there but still needs more time.
I don't see how mining subsidizes research in cheap energy.
Understand they have been debated ad nasueum and the reason is that they haven't really passed muster for the use case we are talking about.
Don't equate my arguments as saying bitcoin is bad - it doesn't have a good universal use case for money and it does have negative environmental benefits associated with it.
(2) It requires real world resources to be spend and uses the most globally available resource, energy. I see it as a feature not a bug.
Renewable energy is the cheapest though[0] and thus the one that competitive miners need to use. Non-competitive miners get driven out very fast thanks to the difficulty adjustment.
Any percentage of optimization you can get in your energy production you can use to outperform other miners, thus get more of the block subsidy and drive out inefficient miners.
Bitcoin mining de-risks investments in energy producing facilities. You always have a buyer for your energy, which is a problem especially in renewables. [1]
[0] https://en.wikipedia.org/wiki/Cost_of_electricity_by_source [1] https://www.sciencedirect.com/science/article/abs/pii/S13640...
Such a horrific, unproductive use of energy is definitely a bug from a scientific perspective, maybe not for a financier.
It is very productive for a large population of the world.[0]
Not everyone gets paid in a stable currency or has easy access to it.
> Not everyone gets paid in a stable currency or has easy access to it.
Bitcoin doesn't appear to solve this issue at all. How is private manipulation of Bitcoin any different than an authoritarian manipulating the local currency? If I was in a country with unstable currency, I'd want Euro or US Dollars, not bitcoin.
As I and the video mentioned Euro and USD is not easily accessible in those countries, Bitcoin doesn't need permission though.
What you refer to as private manipulation is called supply and demand, maybe try reading Econo101 :)
Does Econ 101 cover asset bubbles or financial manipulation? It's been so long, that I can't remember, but I promise you that prices can reflect things other than supply and demand once you manage to get past that first class.
> Bitcoin doesn't need permission though
No authoritarian would EVER cut off or filter the internet in their country. Nope, has never happened, will never happen.
You're right, Myanmar just did that! Scary to think of it. Fortunately Bitcoin works over more communication protocols, but no internet is certainly not in any way easily defendable today. But i still think that physical and banked usd, euros and gold are more easily seizable by a government. A no internet scenario is probably economic suicide by any government.
I really don't get what you mean by financial manipulation in regards to bitcoin.
I would not bet that the government is incapable of cutting off access to bitcoin.
Bitcoin entered a speculative bubble in the middle of 2017.
The supply got less, while the demand didn't decrease. The intrinsic value increased because of the network and lindy effect, which is why institutional investors jumped in. Bitcoin entered a speculative bubble the moment the first block was created.
I would say we just don't know the price of bitcoin yet, hence the heavy volatility.
What would you price it at? Are you shorting it?
Media hype typically drives demand, not supply. Supply in bitcoin is a very fundamental concept and controversial topic, which is a function of proof of work, difficulty adjustment and block subsidy.
What exactly in supply and demand is manipulation? You can't just shout manipulation and argue with "media hype", which historically for bitcoin is very mixed[0] and affects any asset class?
Transaction rates - Artificially kept low to profit miners.
Privacy - Every Bitcoin transactions is on a public blockchain.
Transaction fees - Using Bitcoin for even one transaction a day gets expensive.
Online only - Unlike cash only works with network access.
Conformation Time - Failing to wait for conformation in effect allows double spend attacks. Think 10 people buying computer equipment from different stores at the same time.
Assuming the implementation was changed to support wider adoption, a fixed currency has significant economic issues. For example, making or taking a loan in a currency that’s gaining value quickly becomes untenable.
PS: Of course all of this could be changed, but acknowledging issues is the first step in selecting a new set of tradeoffs.
You don’t need a bitcoin backed token, lightning does it.
Transaction rates are not artificially kept low. In fact most the vast majority of the time bitcoin has excess capacity.
Privacy- this is a legitimate concern but it is improving, slowly. Taoroot and Lightning are both privacy improvements.
So your daily transactions aren't meant for bitcoin. A distributed ledger that replicates all data globally for eternity is not an appropriate method for recording coffee purchases. Though I have done it. Bitcoin makes sense for settlement, and lightning is appropriate for coffee.
That said, I regularly clear bitcoin transactions for $1 or less in fees, and it is cheaper then every other form of payment in the world. You may think a SWIFT transaction is “free”, but its merely the cost is hidden. And don’t forget the inflation tax, that is a global wealth tax on any money held in an inflating currency. So compared to that, $1 to send $100 is cheap.
Online Only- I don’t think there is a solution to this criticism, but not sure what the issue is.
Lightning allows speed without double spend problems. Personally when moving large (for me) amounts of money I font mind waiting an hour for the confirmations. I certainly won’t trust a payment without them.
But bitcoin is voluntary, it doesn't have to be perfect in every regard.
The fact that I need to connect to some peer-to-peer network or third party service for every transaction is a limiting factor. It reduces the efficiency of the system and increases latency, and it adds additional points of failure.
In fact it can be solved for electronic transactions and there is a mountain of published research on the topic that dates back to the late 80s. Here is a recent research paper:
https://eprint.iacr.org/2017/1220.pdf
The idea is to ensure that users who attempt to double spend can be identified and penalized later (e.g. by being added to a blacklist; some systems actually ensure that all transactions in which the cheating user participated can be identified, so merchants who try to evade the blacklist can also be penalized). The money has to be issued by a bank under the security definition. If anonymity is not a requirement -- and presumably a Bitcoin enthusiast does not care about anonymity since Bitcoin is not anonymous -- this can be easily achieved by using ordinary digital signatures.
The credit card network, by the way, is much worse in this regard.
The value of the US dollar as a reserve currency is a faith-based article, and yet it works well. The confidence in the Fed to not unduly dilute the value has reinforced the resolve of the participants to continue to accept it as currency.
Bitcoin's paid many years of dues in this regard as well, and its garnered the confidence of its market participants despite its deficiencies.
You can look it up, larger blocks where allowed in the past, 1MB is a completely arbitrary size that was overkill at the time but hasn’t increased. Even 1$ transactions are quite expensive though they are often much higher.
The lighting network has it’s own separate set of issues. It’s Bitcoin backed but loses some of Bitcoins advantages: https://arxiv.org/pdf/2006.08513.pdf
> Online Only- I don’t think there is a solution to this criticism, but not sure what the issue is.
It’s simply a dependency. Shops may have issues accepting CC payments after a hurricane for example, but they can always take cash.
The biggest problem with bitcoin is that scammers spread FUD to justify their scam coins and too many people believe the FUD.
You are repeating FUD here and basing it in your non-understanding of how bitcoin works.
Transaction clearance - Artificially kept centralised to keep states control supply.
Privacy - Every bank transaction requires real names.
Artificial scarcity - If everyone tried to withdraw the money from their banking accounts at or around the same time, all the banknotes in circulation would be unable to cover all the demand.
This is needed as otherwise banks could claim to have unlimited funds.
Bank notes provide privacy and are created on demand. Having 1:1 bank notes to M1 money supply would simply be wasteful.
Without regulation or FDIC insurance, very few people would be willing to give their bitcoins to a bank so that it could be lent out to people who have a better use for it. Even if a Bitcoin bank could exist, an economic downturn could cause a liquidity crisis, where everyone tries to withdraw their Bitcoin at once. The banks would have no way of returning the Bitcoins to many of their customers. Because there is no central bank that can print out Bitcoin, the entire Bitcoin financial system would be in ruin following the crisis.
I don't have any opinion about Bitcoin one way or another, though through these fascinating arguments I gain new insight about the money and its relationship with geopolitics, human civilisation and other aspects.
[1] https://www.yanisvaroufakis.eu/2013/04/22/bitcoin-and-the-da...
I have yet to have an economist explain to me why deflation us bad- computers getting cheaper is good, fixed income people being able to afford things us good. Inflation mainly allows government to hand out money yo wall street in exchange for bribes at the expense of everyone else. That’s not good.
There are a few different issues. First, volatility is universally bad for a currency, because it makes all transactions in the currency more risky. Money should always be a medium of exchange first and foremost; there should be little to no room for speculating on the value of money and people should not have to factor in unexpected changes in the value of money when determining prices. In general people will switch from more volatile to less volatile currencies because less volatile currencies make trade more efficient.
Unexpected deflation is particularly bad, because in addition to the general problems with volatility, it also triggers defaults on loans (because money becomes more difficult to obtain). Too many defaults in too short a period of time will create a "contagion" effect by reducing the collateral held by lenders (who use loans as collateral for their own debts), which triggers even more defaults. Worse, as lenders see their collateral vanish, they will try to make up the difference with money, taking money out of circulation and causing even more deflation and thus more defaults. This is the "deflationary spiral" scenario.
Inflation is not some trick to hand money over to "Wall St." Rather, a low, predictable rate of inflation is targeted so that there will be some "breathing room" during an economic crisis. It does not hurt people on a fixed income because it can be planned for and the fixed income can be adjusted for inflation (e.g. someone could hold a portfolio of TIPS). It also has nothing to do with the price of computers, which have become cheaper because of economic growth (and in fact have become cheaper over decades of inflation). Inflation also encourages investment activity by discouraging the hoarding of money, which is a good thing for the economy.
And I assure you, as someone who holds bitcoin that has greatly appreciated, I can’t wait to spend it on things that depreciate.
In fact my spending has increased now that my spending power has increased dramatically.
As for what we should expect...why should the current situation be so surprising? The vast majority of merchants who "accept Bitcoin" use a third party payment processor that immediately converts Bitcoin into a fiat currency. The number of people who use Bitcoin as money, rather than as a system to communicate payments made in some other currency, is vanishingly small. The "technology industry" has mostly focused on non-monetary applications of blockchains and a lot of attention has been paid to "permissioned" blockchains because they are overwhelmingly more efficient.
1 bitcoin will always buy more and more and more and more. So you have zero incentive to spend your money today and you have all the incentive to wait as far as you possibly can before spending anything. The economy would grind to halt. Isn't this obvious?
Besides, rich people can sit on their money instead of re-investing. They will never have to work and neither will their descendants. You basically established some kind of stupid cyberpunk feudalism.
Computers get cheaper every year such that even inflated dollars can be held to get a better computer next year.
And yet the technology industry has not ground to a halt. Food is low tech, cell phones are high tech.
It is obvious- this argument in favor of government being able to debase the currency to fund wars and somehow that’s good for poor people is never going to hold water.
But here is another thought- no matter how much you call it stupid, or fuedalistic, leftists gave been making this argument fir over a decade now and Bitcoin has only gotten stronger.
You may even be able to make it “illegal” if you ignore the constitution and laws, but you cannot stop it.
Bitcoin will be the tool that liberates the people out from under your technocratic thumb.
Thats what I find most exciting.
I think you really have poor mental models of the world. I'm sorry but there's not even anything else I can say.
In the context of deflation goods getting 'cheaper' simply means that their nominal price falls, while real prices remain constant. If you thought that deflation makes people richer (or that inflation makes people poorer) then you were wrong.
Bitcoin fixes this.
Remember, if you have money in an interest generating account then you don’t have actual cash you have an IOU for cash with whatever institution you deposited that money with. Now, changes to the inflation rate or hyper inflation are another story, but consistent ~1.5% inflation is the goal.
At risk of being the "Let Me Google That For You" Guy, it's not too hard to find articles where economists give cases against deflation, e.g.:
https://www.brookings.edu/opinions/5-reasons-to-worry-about-...
https://www.economicshelp.org/blog/978/economics/definition-...
https://www.pbs.org/newshour/economy/why-is-deflation-bad
The basic argument is that in small amounts, both inflation and deflation can be fine, but either one can become a problem. The issues with too much inflation are fairly obvious; the issues with too much deflation is that downward price pressure falls on everything. If deflation is so reliable that prices are going to be meaningfully lower if I can put off a big purchase for as long as possible, I'm going to do that. If enough people follow my lead, that hurts sellers. Wages go down -- more than likely through layoffs rather than pay cuts. And anyone who's already in debt -- and this doesn't just include your Uncle Bob who routinely puts too much on his credit card, it includes companies using lines of credit -- can end up in real trouble.
> computers getting cheaper is good
Sure, but -- even though I've seen this example trotted out before as a pro-deflation argument -- the prices of manufactured goods steadily fall due to continual improvements in manufacturing processes, economies of scale, and general technological progress. This has been particularly noticeable in computers over the last three decades, but Moore's Law isn't a supporting argument for the benefits of monetary deflation.
Asserting that an argument is not an argument is not a rebuttal.
The claim that people having more purchasing power will stop the economy is self serving for inflationists and never supported by evidence.
In fact the opposite has been the case time and time again.
As I proved in the example you simply ignored.
So, like I said, I have never seen an argument. Just these kinds of self serving assertions.
You are confusing the consumer price index for “inflation”. It’s understandable, this lie is one of the earlier examples of fake news.
When the fed prints money it goes to wall street and politically connected people. (This is quite literally the definition of fascism- a private economy run by government)
Wall Street profits from the inflation, but the rest of the people get poorer.
Also people that put their money in the stock market for the long term will do much better than others. Even if they are poor, it doesn’t matter. Just buy SP500 with all the money you can spare.
At worst inflation is a tax on ignorance. If you keep buying crap you don’t need with your dollars instead of investing... it will suck for you.
What about those that are so poor that have zero money to spare in the first place? Well, that’s a situation that shouldn’t even exist. That’s why I live in European Social democracy where governments actually distribute wealth.
The US is not Zimbabwe. It’s not even comparable.
You can literally shove those dollars down the throat of the rest of the world for as long as the status quo is maintained.
Is this going to be a new slur from the community?
Compare someone with a billion dollars and someone with 0 dollars today. Then huge inflation comes... who lost more purchasing power? Not the person with zero dollars, that’s for sure!
You really need to take a step back and start thinking because there are multiple people here spending their time and energy trying to explain something basic to you from first principles. Have some self doubt about your worldview. You are dismissing sound logic based on what? Most of the things you reply don’t even make sense.
Contrary to the Bitcoin crow I don't spend my days thinking about it so my argument may seem weak. You mention bitcoin being 'the best form of money'. Assuming there is a hierarchy of forms of money, from what I understand the main advantage of Bitcoin is that Government can not manipulate its quantity. I wonder if a world where there is no possibility for governments to use monetary policy in times of trouble to stabilize the economy is desirable.
The economy is very complicated. There are no models that can predict the output of changing its parameters. It wasn't possible before to have the properties in money that we have with bitcoin (a gold standard was easily removable by a powerful government). The current central banking system is an experiment as much as anything before it and anything that will follow.
I see it like this. I want my economic output to be measured in something that is:
- salabale over time (1 btc is always 1/21 million of the monetary base)
- salabale over space (i want to work remote)
- understandable and auditable (the bitcoin concept can be understood by everyone, the code is auditable by mid-level developers)
Why is that good? Why should I, if I have 1 bitcoin, always have ownership of a fixed proportion of the entire societal monetary base?
This seems like a great deal for someone who has a bitcoin, and a terrible situation for new workers and the economy as a whole. If the economy expands, your fixed proportion of the monetary base sees you profit off the backs of others for nothing more than sitting on currency. Not investing, not even speculating, just sitting on it.
If you don't invest your bitcoin in productive assets you will be behind peers who do that, however they carry a risk.
Today you carry risk if you don't invest your savings. However with low-income you can't, as you need emergency funds.
As an employee, in a growing economy denominated in bitcoin, you would see your pay drop frequently as the money supply gets stretched. There's no reason at all to think BTC-denominated salaries would be able to stay constant as the value of the money rises.
> I also would like to be able to save without having to put my economic output at risk.
That's not the same thing, a fixed proportion of the money supply does not guarantee that, nor is it a necessary precondition.
Further, this is not in the interest of wider society - work today should be valued more than work yesterday. If you want to grow your money, you make it work.
This is just a rehash of the problems with the gold standard now. But worse.
Assuming the world productivity is denominated in 21 million bitcoin, if world productivity grows by 3% per year, my salary of 1 bitcoin gets more purchasing power. This is where you get a lever with your employer, he needs you to earn less, you don't have to negotiate to earn more (same applies to minimum wage, it needs to be adjusted upwards in a inflationary monetary system)
Every money is inherently more valuable yesterday than today, as you can divest it. I would argue that it is very much in the interest of the wider society to have their savings not inflated.
The best way to make your money work will always be to invest it in productivity, be it in educating yourself or investing it in companies. This investments need to be a lot more smarter and more sustainable than those of today, as the base money is not worth less every year.
I think wasteful spending is a property of an inflationary money, where smart spending would be a required property in a non-inflationary money.
Like I said, most of the rest is just a rehash of gold standard stuff.
Exactly, however bitcoin is infinitely better money than gold and makes the "gold standard" viable. Fortunately the gold standard has a lot of proponents globally, some of whom started embracing bitcoin.
I just hope that the experiment bitcoin keeps on going and I'm guessing we will see some form of resolution, maybe even in this decade. There is a lot to learn still.
Do you mind giving me some of your arguments why it's terrible?
There's plenty of literature out there about the end of gold standards in various countries. The upshot of it is that economies get warped by constrained currency supply and those who already have tend to get more, over those who produce or invest.
More specifically, Austrian economics is overtly and proudly ideological rather than empirical; it is about advancing an agenda not describing reality.
It's worth taking seriously, but as a particular group’s body of theology and religious propaganda, not as science.
Your last sentence was decent; the rest of your post was... not very useful.
True, it's not so much an argument as a fact. As the other poster says, it's basically a set of idealogical positions.
> implying "go do your own research"
You're right, I shouldn't have left that to implication.
I'm not trying to win a debate here, nor am I interested in debating the merits of a system that I don't think has any.
but you are going to pay more for the same goods and services
if your bitcoin is 3% more valuable, when you use it to buy milk it's going to cost you 3% more
the game is working only because today if bitcoins increase their value you can exchange them for more fiat money
in a bitcoin economy one bitcoin is worth exactly one bitcoin, forever, whatever that buys
You seem to have it backwards, this is where the Econo101 book from the parent comment might help ;) /s
Inflation drives down the purchasing power, hence why milk gets more expensive every year, even though we get much more efficient at producing it. Remove inflation and 1 bitcoin buys you a liter today and 1.03 litres next year.
and so do salaries, they are a cost to someone ...
as long as your purchasing power stays the same salaries will go down as well.
it's simply natural.
you can't really believe that billions of people will get rich by sitting on the salary of a single year
BTW that liter of milk will generate 3% more profit to the seller. there is no incentive to lower the prices if hoarding is so rewarding
You won't get more rich by sitting on your salary, but you will also not get more poor like you do today.
If the milk seller doesn't lower his prices a competitor will do that, as he is able to do that with the bigger margin the better productivity brought.
That's a political issue, it has nothing to do with how currencies work
If the milk seller is going to lower the prices to beat competitors, workers will compete on salaries as well
nothing different from what we have now, the only difference is that rich people could amass fortunes much more easily than today
they'll just need to keep their money in the bank (i.e. their gold reserve will keep appreciating by the virtue of existing)
Rich get richer today by being closer to the money source. In the "bitcoin standard" non-rich people can even keep their money in the bank and don't lose purchasing power by not risking it.
Rich and non-rich will always want to take risk to increase their net worth, however the assets must perform much better to outperform the money. Unlike today where almost all investments appreciate when measured in fiat.
edit:
> That's a political issue, it has nothing to do with how currencies work
Would you agree that it would be a good thing if the base monetary layer would enable that? I only see that happening with a monetary policy that respects savings and is not alterable by a few elected and unelected officials
assuming they don't need the money to live and realise that 5 years ago they spent a today fortune on a liter of milk...
You assume your salary remains fixed. Why would it? As a portion of global productivity, your contribution shrinks.
Your labour certainly isn't.
In other words, you must cover the cost of vastly more energy per Bitcoin transaction compared to the mainstream financial system. Environmental concerns aside, that amounts to a huge tax on every transaction that reduces the economic efficiency of the system. Note also that this is a per-transaction tax, regardless of transaction size, making Bitcoin less useful for small transactions.
There is also the fact that such a high energy cost per transaction causes the value of Bitcoin to be more strongly correlated with the price of energy. Energy prices are notoriously volatile; hence Bitcoin's value will also be volatile. Volatility makes a currency less useful (it introduces risk into every transaction and disincentives investment) and a very volatile currency will eventually be abandoned entirely. It should surprise nobody that the overwhelming majority of merchants who "accept cryptocurrency" as payment do so via services that immediately convert that cryptocurrency payment into their local fiat currency, because the majority of the world's fiat currencies have very stable values (compared to Bitcoin etc.).
I could go on but to be honest the technical objections to Bitcoin outweigh the economic objections, at least in my opinion. Happy to get into those objections as well if anyone is interested.
Btc is not replacing visa. Btc is replacing central banks. The appropriate comparison here is what is the energy cost of the banking infrastructure of the incumbent system.
>Environmental concerns aside I am concerned that you are using electricity to power your computer, access the internet, and comment on HN. Are you the arbiter of "moral" energy use? Am I? Slippery slope, and an anti-human one at that.
>Energy prices are notoriously volatile; hence Bitcoin's value will also be volatile.
This is not how it works. There is an argument to be made for risk of on-grid miners sudden increase of electricity prices in the case of a power shortage. Miners don't like this type of risk, so they choose to locate at places with abundant supplies and stables prices of electricity. Miners sign long-term electricity agreements. Risk to off grid miners is another level removed from on grid miners.
>will eventually be abandoned entirely. According to how you feel? All signs point otherwise.
>the technical objections to Bitcoin outweigh the economic objections You are free to make your own fork, BIP, or new "crypto" and compete. Good luck. By the way, there are 7999 "crypto" coins competing and losing so far.
Also, as you noted the energy usage is correlated with the value, not the transaction rate. Transaction rate limits could be changed arbitrarily without affecting the energy usage of the coin.
However you have the causal relationship backwards: The value of the coin determines what level of electricity spending is profitable for miners. The electricity spending of miners doesn't determine the value.
The transaction rate is not what matters; what matters is the energy spent per transaction. Visa process many more transactions for much less energy than Bitcoin, and is therefore more efficient. I suspect Western Union's energy consumption is roughly in proportion to Visa's, but I have no data (the Visa example comes right out of their annual report, which covers both the number of transactions and amount of energy consumed).
"The electricity spending of miners doesn't determine the value."
The energy cost determines the transaction fees. Higher transaction fees make Bitcoin less valuable by imposing a greater burden on using the system. Yes, there are other factors that determine price of Bitcoin, but if nothing else changed ("all things being equal") then volatility in energy prices would trigger volatility in transaction fees and thus volatility in Bitcoin's overall value.
> Higher transaction fees make Bitcoin less valuable by imposing a greater burden on using the system ... volatility in energy prices would trigger volatility in transaction fees and thus volatility in Bitcoin's overall value.
Good point, that is certainly a risk with Bitcoin.
EDIT: Actually thinking about it more I'm not sure why this would be true. Since the transaction rate is not related to the number of miners, volatility in energy prices might cause miners to enter/leave the system but I don't see why it would impact the coin prices.
The reason it impacts coin prices is that higher transaction fees make Bitcoin less desirable as a medium of exchange and reduces demand. To put it another way, let's say I am paid in Bitcoin. If transaction fees increase, I will need to demand a higher nominal salary, at least enough to cover the transaction fees incurred when I spend my salary. Likewise, any merchants that accept Bitcoin payments will raise their prices, to cover the fees they will have to pay. Yet the same work is being done and the same goods are being sold; hence, inflation, or in other words, the value of Bitcoin has decreased.
Miners can't choose the transaction fees, they will either process the most expensive transactions they see or just stop mining. If they stop mining, that doesn't impact the rate of transactions that can be processed.
Obviously everything I described is a simplified model where energy costs change equally for all miners. The real world is not that simple, but there is some correlation in energy costs across different regions as there is a global market for typical fuels (coal, natural gas, uranium, etc.).
It is also important to remember that transaction fees are not in proportion to transaction sizes. People doing large Bitcoin transactions could absorb much higher fees, so in all likelihood nobody would be priced out of the market (and Bitcoin would be dominated by large transactions, which is more or less the case right now).
Miners will shut their equipment down as soon as the electricity costs become greater than the rewards. When some of the miners shut their equipment down, that causes a difficulty change which makes mining profitable again for the remaining miners, and also keeps the transaction rate the same. The miners have no way to impact what transaction fees are acceptable because they have no control over the transaction rate.