Still the fees must cover the cost of running the network or no one will process transactions and be less that competing services (VISA?). Is there an optimum network size that guarantees security?
I suppose that is what this experiment is intended to discover.
Obviously a network of one is the cheapest but guarantees no security.
Clearly.
The incentives have been created by the protocol.
The experiment will play out, and the free market will determine how big of a network it is willing to pay for. Over time, mining will likely migrate to the locations that are most favorable for profitability. Since the revenue per hash is fixed for any given network size, this means that profitability is increased by the reduction of mining costs. I think most of the ongoing costs of mining are electricity, cooling, and internet access. Therefore, it would seem that the mining operations that manage to minimize those costs are most likely to eventually push out the operations that have higher costs associated with those assets. Perhaps mining will eventually move to the poles (where cooling costs are minimized)? Or areas with cheap access to renewable energy sources (such as hydro-electric or geothermal)?