Bitcoin Block Space as a Commodity Market

Summary

The December 11, 2025 episode of Abundant Mines features Bob Burnett explaining why Bitcoin’s future hinges on treating block space as scarce, priced infrastructure. Burnett argues that the current era of cheap, on-demand base-layer settlement is ending as subsidies decline, fees rise, and competition for energy intensifies. He contends that new block space markets, mining models, and institutional tools are required if Bitcoin is to function as a reliable global monetary base layer.

Take-Home Messages

1. Block space scarcity is imminent: Burnett argues that users have been subsidized by nearly free block space and that long-term security requires explicit, commoditized pricing of on-chain settlement.
2. Fees must replace the subsidy: As halvings reduce new issuance, he maintains that a robust fee market is essential to sustain miner revenues without making Bitcoin unusably expensive for everyday transactions.
3. Mining pool models face structural stress: Burnett warns that full-pay-per-share pools were designed for subsidy-dominated rewards and may fail when highly volatile fees become the main income source.
4. Energy competition will reorder mining: He emphasizes that miners will increasingly compete with AI and other industries for cheap, reliable power, driving consolidation toward operators with strong energy contracts and uptime.
5. Institutional adoption needs predictability: Burnett contends that corporate treasuries and lenders will only rely on Bitcoin if they can plan settlement timing and costs through instruments like block space reservations and futures.

Overview

Bob Burnett begins by linking his experience in the personal computer industry to Bitcoin, arguing that both revolutions decentralize control over critical infrastructure. He recalls how PCs broke the mainframe monopoly and suggests Bitcoin can similarly erode centralized monetary power if its base layer remains robust. This framing sets the stage for his claim that Bitcoin is still early in its adoption curve yet already confronting structural questions about security, governance, and economic design.

He describes the past decade as an anomalous era in which the block subsidy effectively hid the true scarcity of block space. In Burnett’s view, users have become accustomed to treating on-chain settlement as a cheap, elastic resource even though each block offers only limited capacity. He argues that as subsidies decline, this mismatch between perception and reality will force the emergence of explicit pricing, reservations, and hedging mechanisms for block space.

Turning to Bitcoin mining, Burnett stresses that Bitcoin’s long-term security requires fees to evolve from a rounding error into the primary revenue source. He explains that full-pay-per-share pool models were built for environments where subsidies dominated rewards and variance could be smoothed across many blocks. Once fees become large and spiky, he believes these models will struggle to manage risk, pushing miners toward arrangements where they accept more variance and exert more direct control over nodes and block templates.

Burnett also highlights the “miner’s trilemma” of hardware efficiency, energy price, and uptime, arguing that energy will increasingly dominate strategic decisions. He anticipates that AI data centers and other compute-heavy industries will bid aggressively for the same cheap, reliable power that miners seek, especially in the US $0.025–0.05 range. Alongside these industrial pressures, he suggests that transformative Bitcoin use cases are likely to emerge first in poorer or politically constrained countries, where demand for censorship-resistant savings and settlement can be strongest, even as institutions in developed markets push for predictability and compliance.

Stakeholder Perspectives

1. Regulators and central banks: Monitoring how fee-driven security, block space markets, and potential transaction filtering affect monetary stability, financial integrity, and surveillance capabilities.
2. Institutional treasurers and lenders: Weighing whether they can schedule Bitcoin-based settlements and loan payments with sufficient predictability amid fee volatility and mempool congestion.
3. Miners and mining pools: Reassessing revenue models, variance tolerance, and governance roles as fee income grows and traditional FPPS structures face rising stress in a fee-dominated environment.
4. Energy producers and grid operators: Comparing the economics and grid impacts of supplying power to Bitcoin mining versus AI and other industrial loads, while managing political and environmental scrutiny.
5. Developers, wallet providers, and infrastructure firms: Designing tools that give mainstream users access to reliable settlement and block space markets without eroding decentralization or enabling censorship.

Implications and Future Outlook

Burnett’s focus on block space as “digital real estate” implies the emergence of a new class of financial instruments built around on-chain settlement capacity. Over the next several years, futures, options, and reservation markets for block space could allow institutions to pre-purchase settlement guarantees and miners to hedge revenue risk. The design of these markets will influence who can reliably access the base layer, how censorship is resisted, and whether complexity is absorbed by specialized intermediaries or pushed onto end users.

As the subsidy declines toward zero, the balance between fees, hash rate, and network security will become a central concern for policymakers and industry participants. If fee markets develop in a way that sustains miner incentives without pricing out critical settlement, Bitcoin can credibly function as a neutral monetary base for diverse jurisdictions. If the transition falters, concentrated mining, unstable pool structures, or unreliable settlement costs could constrain adoption to a narrower store-of-value role.

Competition for cheap, reliable energy from AI and other industries will likely reshape Bitcoin mining’s geography and corporate structure. Jurisdictions that pair low-cost power with regulatory clarity may attract both mining operations and related industrial investment, while regions with unstable policy or grids risk losing hash rate. These shifts will feed back into debates over mining centralization, environmental policy, and the extent to which Bitcoin’s base layer can remain globally accessible and politically resilient.

Some Key Information Gaps

1. How should block space reservation and futures contracts be designed so that institutions can secure required settlement capacity at predictable costs? Clarifying viable contract structures is essential to support large-scale monetary use without undermining decentralization.
2. Under what fee and price trajectories can miner revenues remain sufficient to secure the network as the subsidy approaches zero? Robust modeling of security budgets is needed to assess long-term risks and guide both policy and industry planning.
3. What alternative payout schemes could replace FPPS when fee revenue becomes the dominant and highly variable component of block rewards? Identifying sustainable pool and miner compensation models will be crucial to maintaining stable hash rate and managing variance.
4. How will rising AI demand for cheap, reliable power reshape the geographic distribution and energy sourcing strategies of Bitcoin miners? Understanding this interaction will help stakeholders anticipate where mining will concentrate and how grids should respond.
5. What trade-offs are involved in prioritizing Bitcoin as a global store-of-value asset versus redesigning tooling and markets so it can serve as a primary monetary settlement layer? Evaluating these strategic choices can inform regulatory responses, infrastructure investment, and ecosystem roadmaps.

Broader Implications for Bitcoin

Financialization of Settlement Infrastructure

If block space becomes a tradable commodity with liquid derivatives, settlement capacity itself will integrate into global capital markets alongside interest rates and foreign exchange. This would enable sophisticated hedging and planning for institutions but could also introduce new channels for speculation and systemic leverage tied directly to Bitcoin’s base layer. Over time, regulators may need to treat block space markets as critical financial infrastructure, with debates over transparency, access, and the risks of concentrated control.

Redefining Payment Finality and Risk Management

Structured access to Bitcoin block space would allow firms to treat base-layer settlement as a scheduled, risk-managed resource rather than a best-effort service. This could push treasury, lending, and trade finance practices to incorporate on-chain finality into standard risk models, particularly in cross-border contexts. As more contracts assume Bitcoin-settled obligations, legal and accounting frameworks will have to adapt to accommodate probabilistic fees and mempool dynamics as core operational variables.

Energy Policy and Industrial Strategy in a Bitcoin–AI World

The emerging competition between Bitcoin mining and AI for cheap, reliable power positions energy policy as a lever over both digital money and compute infrastructure. Governments that deliberately align energy development, grid modernization, and rules for flexible loads could attract capital from miners and AI operators while steering them toward stranded or renewable resources. Conversely, poorly coordinated policy may drive these industries offshore, fragmenting hash rate distribution and limiting domestic influence over a growing share of digital economic infrastructure.

Governance of Transaction Policy and Censorship Resistance

Burnett’s distinction between “hashing companies” and “real miners” highlights how practical power over transaction selection can concentrate even when hash rate appears distributed. As block space grows more valuable, incentives to impose filters—whether for sanctions, regulatory compliance, or commercial preference—will intensify, and the balance between pool-level policies and miner autonomy will matter more. Ensuring that governance mechanisms, technical standards, and social norms preserve censorship resistance will be a central challenge for developers, businesses, and policymakers alike.

Peripheral Innovation and Monetary Fragmentation

The expectation that breakthrough Bitcoin use cases may arise in poorer or politically constrained countries suggests a future where monetary experimentation is driven from the periphery rather than the core. If these jurisdictions adopt Bitcoin-based settlement and savings tools earlier and more deeply, they may pioneer new institutional forms, from local energy-backed mining schemes to alternative banking models built around base-layer finality. Over a 3–5+ year horizon, this dynamic could increase monetary pluralism, creating tension between legacy currency blocs and regions that lean more heavily on Bitcoin’s infrastructure for resilience.