[lottin]

Seriously, this isn't rocket science. Ethereum provides a service, namely it stores data and does some computations in exchange for a fee. Ethereum users pay a fee and in return they have their computations done. By definition, Ethereum is profitable if and only if the fees that are paid by its users exceed the costs that are incurred by whoever is in charge of doing the computations and keeping the network running. (I thought these were the "validators" but I might have got the terminology wrong, apologies if this is the case.) Therefore we need to know, on one hand, the total amount of fees paid by the users and, on the other hand, the total amount of costs incurred by the network (i.e. by all the entities that do the computations and run the network), over a particular time frame.

[yokem55]

The disagreement here seems to be "how relevant are the real world costs and profitablity born by ethereum node operators and validators to the overall 'costs' of running ethereum"?

You seem to think that is the end all be all to measure the profitability of the network. And you aren't entirely wrong. If it requires too much hardware, too much internet bandwidth, too much in the way of skilled node operators relative to the value the folks running the nodes would gain, the number of particpants would dwindle and the physical network would suffer.

So there are boundaries that real world costs impose on the operation of the network. But at what level do those boundaries kick in? Well, that is why it's been an important value to the developers that a node can be run on 'commodity hardware and internet'. You can run a full node on a standard Pc from the last 5 years with 16gb of ram (less in some configurations), a 2 tb ssd (or 1tb if you don't mind some downtime every few months), a modest internet connection and can be done so by anyone with some basic command line skills.

Because of those modest demands, I can and do run a non-validating node on old hardware I already owned on an internet connection I would be paying for anyway. I make $0 from doing so, but it interests me as a hobby because I want non-intermediated access to the the network. In contrast some large node service providers have immense costs because they host on a cloud services and they hire expensive SRE's to keep it running at a high reliability level. But they woudn't be spending that money if they didn't seem some kind of profit or value in it. Because of that variability and the low baseline to get started, whether it is real-world profitable to any particular participant is irrelevant to "ethereum" as a whole.

So, from my view, it becomes reasonable to look at it as "how much ether is created vs how much is burned" to see if "ethereum" as a whole is profitable.

[lottin]

I don't know if it's relevant, I think it's interesting, to me at least as an economist, to ask these questions. What you do with this information is up to you.

[aljungberg]

Whatever that number is, it will be equal or less than the number already discussed. The network “hires” contractors to provide the services you mentioned and it pays a known figure for that. Not much else to it really. Since all we are discussing is whether the network is profitable or not in this thread we don’t need to dig into more specific analysis of the service providers’ internal costs (and indeed that would be difficult since they are globally distributed with different attendant costs and efficiencies). Just to note they are unlikely to themselves be making a loss is sufficient.

[lottin]

No, the costs incurred in providing a service is exactly what needs to be quantified in order to determine whether the provision of that service is profitable. If you insist that the contractors must be excluded from the analysis (for some reason), then you have to admit the possibility that the network is being subsidised by the contractors (as would occur if they were operating at a loss), at which point the entire concept of profitability of the network becomes rather meaningless. So you can't exclude the contractors. And you can't simply assume that contractors are unlikely to be making a loss either, because that's exactly the question that we're asking.

[TimJRobinson]

Yea the costs are the tokens it pays to validators. I'm not sure what you don't understand about that. Ethereum the network takes payment for transactions, and pays validators for validating. It is profitable because it currently takes more payments for transactions than it pays to validators. All of this is on the sites I mentioned.

How could validators possibly be revenue? Maybe it helps if you visualize them as contractors who do a job for the Ethereum network, and get paid for that. How the contractor manages their own budget is irrelevant to Ethereum.

[lottin]

Good heavens. The contractors are the network. If you leave the contractors out there's nothing left. There's no network. The network doesn't take payments. Contractors do. Other than that of contractors, there is no economic activity. In this view, the network is neither profitable nor unprofitable, since the entire concept of 'profitability' refers to an economic activity.