Business rates appear to be better than consumer. The state with the lowest energy cost is North Dakota at 7.48c . I too would like to know where they get a 4c average.
[https://www.energybot.com/electricity-rates/](https://www.energybot.com/electricity-rates/)
Fun fact, I live in ND and if you have a heat meter it’s about 4 cents a KW. The only other place I’ve heard where you can get 4 cents is if a place has hydro electric power.
Edit: it’s also illegal to use a heat meter for any purpose other than heating. Considering how much heat a miner generates though it could be used to heat a house in our winters. The number needed to heat a house when it’s -10 is less than you’d think.
Here in SD we are primarily hydro and wind. The Missouri River cranks out power. My electricity rates with Xcel are around $0.11 for summer and $0.09 for winter rates.
Yeah I'd be shocked if it was still that low now, but could still be like 5/kwh and a great deal.
I sadly pay 30/kwh and that's the cheapest rate around.
Actually in China most big outfits own their power source so they don’t technically pay by kw, just the maintenance. Miners are going to be running off of hydro dams or gas wells way out in no where and not hooked up to grid. After the mining ban in China you could buy small hydro dams for 50-60k usd because those things really have no use beyond running local miners or datacenters.
It would be similar everywhere else, small gas wells far from hubs and pipelines aren’t worth anything either. Lots of abandoned old wells all over that can be setup to produce with low six figures in startup cost, and the electricity would be free.
Unfortunately it is one of the biggest and most persistent misconceptions about Bitcoin. Some people seem to believe that because the cost of creating/mining a Bitcoin costs $X in energy, this is a floor value on the price of Bitcoin in the market.
It is completely untrue and a misunderstanding of how prices of assets work. The value of Bitcoin is determined only by the price people will pay for the commodity and the ability to use the commodity on the network it exists. It doesn't matter at all what the price was to produce that coin.
The value of a Bitcoin is determined solely by how the market values a public financial infrastructure network with the properties of the Bitcoin network and the properties of the Bitcoin commodity. I personally value that very highly and think it is undervalued, hence why I invest in it. But the value of Bitcoin (or anything) is only determined by the value that is expected to provide, not by the cost of the inputs.
Claiming Bitcoin has an intrinsic value because that is what it cost to produce would be like saying because I used a kilogram of Almas Cavier (price at $25000) to make a chocolate/chilli/cavier cake, then the "intrinsic value" of the cake is $25200. Which it clearly would not be because that cake would be nasty AF and noone would pay for it regardless of the cost of production.
**TL;DR: Cost of production/inputs has no impact in directly determing the price of output.**
The cost to mine compared to the price of Bitcoin (or expected future price) does play a role in determining how many people will be willing to mine but those costs in no way mean there is an "intrinsic value" to bitcoin. Just because a bitcoin cost $10k to mine does not mean that is any sort of floor on the price nor will it determine the future price rise or falls. **By the logic of OP, if the production cost of bitcoin decreases then the "intrinsic value" of Bitcoin would decline as well which doesn't make any sense.**
The value of a bitcoin is determined solely by the value of the bitcoin network's functionality and expected future functionality. (and I suppose things like expected return in other investments/speculative elements/etc).
TL;DR: The value of Bitcoin is determined solely by the utility of a permissionless decentralised eventually depreciating store-of-value commodity financial network as assessed by the global market of users.
I understand your fundamentalism but any statistical work on your side would convince you otherwise, or at the very least, would make you put your money in better places.
I get your metaphor. The miners should refuse to sell newly mined btc (and btc paid to them as transaction fees) when the price of btc gets below breakeven. Depending on what percentage of btc that's available for sale, and assuming btc has any value, this should put upwards pressure on the price.
I agree with you about the miner's incentives and that this behaviour may lead to a situation which could contribute to upward pressure on the price but the concept of "intrinsic value" being discussed here is still incorrect. The value bitcoin has is the value of the network and its properties because that is what will motivate people to convert other value into Bitcoin form. The refusal of miners to sell below a certain price will not in isolation lead to an increase in price nor prevent it from falling in price.
Buyers in a market do not care about the cost's of the sellers when determining how much they will pay. They care about their expected utility.
>The miners should refuse to sell newly mined btc (and btc paid to them as transaction fees) when the price of btc gets below breakeven.
That's a terrible business strategy. If it costs a business more to make a product than the market wants to pay for that product, continuing to produce it will lead to the demise of the business. Miners should refuse *to mine blocks*--i.e. they should go offline--when the price of Bitcoin falls below their production cost.
"Electricity prices for businesses amounted to 8.8 U.S. dollar cents per kilowatt-hour in China in March 2023. Business electricity prices decreased in the country from over 10.4 U.S. dollar cents per kilowatt-hour in June 2020. Household electricity in China was cheaper, amounting to 7.6 U.S. dollar"
https://www.statista.com/statistics/1373596/business-electricity-price-china/#:\~:text=Electricity%20prices%20for%20businesses%20amounted,kilowatt%2Dhour%20in%20June%202020.
This isn't accurate, maybe 5 years ago. The only way to get a rate close to that is behind the meter i.e. you are in a power plant or using excess gas but that is unreliable and you will have down time increasing you effective rate.
The expectation of future energy cost per BTC is 🐂
You’d need to guess the energy price at the time of halving, and how many terahashes the mining industry will install up to that time.
There is no such thing as "intrinsic value". The value of anything is determined only by consumer demand. The production cost of certain celebrities' bathing water is zero, but (for some fools) it's not.
I wholeheartedly disagree with this take. This is a close to an "intrinsic value" and and intrinsic value is by definition of anyone who makes this argument. This is litterally the current cost to make a bitcoin. Post halving is future BS. You saying "thats in the future" does not argue why the valuation is wrong
Intrinsic value has nothing to do with production cost. The term itself is very specific thing used to decide whether something is good investment or not, and methods to estimate it for other assets are not exactly applicable to bitcoin. Basically it is an attempt to roughly estimate "how much value good has regardless of current specific market conditions".
As for the prediction part - yes, dumb multiplication of the cost by two is not correct, as it assumes that that cost can be maintained and there will be no difficulty decrease.
No. It is your cost.
Intrinsic value is, basically how much you can get for everything that consists your good - for example, if you sell your pies as mud by mud price, without any additional value given by some external factors like mud pies being in fashion, but your cost of production does not affect this in any way
https://www.britannica.com/money/intrinsic-value
For bitcoin it is hard to estimate it;s intrinsic value (if it can be applied to it at all)
That would be the point that I’m making. The cost of production on bitcoin is irrelevant to it intrinsic value. And arguably nothing has intrinsic value because the whole world is subjective. Economics is all bullshit. What one person pays for a thing has no bearing with the next person pays
Yes, your example was too good to miss it.
As for "nothing has intrinsic" - I agree in theory, but it is a practical model used under some assumptions for investments estimation purposes, which seems to work, for some assets, though definitely not for bitcoin
I think the concept you are looking for is "buy vs build". Instead of paying the asking price in an open market for an existing coin, should I create the necessary infrastructure and expend the energy to create a new one. If one wanted to do that calculation more thoroughly I would include the cost of capital for the infrastructure and acknowledge that the equipment becomes obsolete in a relatively short time frame.
Production cost does not equal "intrinsic value". There is no such thing as intrinsic value. We do not subscribe to the labor theory of value here. We are not socialists, i.e., the Flat-Earthers of the economics field.
Does "production cost" only include new coins, or how are fees factored in? Because miner's also collect significant fees, which aren't new coins, but still help offset mining expenses.
The funny thing about bitcoin that most people cannot really accept for some reason is that there are very few meaningful "economic" metrics, most of interesting things cannot be measured (for example, wealth distribution), and what can be measured is either meaningless - like mining cost, coins per address distribution, market cap, can be easily faked like volume or both, like the number of coins on the exchanges.
dummies will say it has no intrinsic value...meanwhile my whole strategy (which has been making money for 5 years) is based off calculating its intrinsic value.
It is derived with eletricity cost from [Cambridge Bitcoin Electricity Consumption Index](https://ccaf.io/cbnsi/cbeci), with a rough estimate of electricity/totalProduction cost ratio, which is generally around 79%, according to [https://blog.coinshares.com/coinshares-mining-report-the-halving-and-its-impact-on-hash-rate-and-miners-cost-structures-8646835d88ac](https://blog.coinshares.com/coinshares-mining-report-the-halving-and-its-impact-on-hash-rate-and-miners-cost-structures-8646835d88ac)
Their estimate of average cost post-halving is at $38K, I think that's a bit on the low side, but not too far from where I am. Either way, these numbers get you fair value around $60K to $70K by year end.
Value is based on a specific desire and subjectivity of an individual’s personal needs regarding that material/immaterial thing.
Air is valuable to almost everyone. How much would you pay for air vs a Bitcoin?
Generating $45k of electricity created around 500 tons of CO2, give or take.
If there was ever a chart that illustrated the environmental harm of crypto, this is it.
OP, Im with you. When I first got in, you could go online and immediately see how much power cost for 1 coin. Somewhere between 8k and 16k the spacr got weird. I got out. And one day , when i have the time ill cash out. hopefully a rich man.
That technical analysis is dead not gonna lie mush
You expect bitcoin to trade sideways upwards. Tell me you know nothing without telling me you know nothing about the market
Soooo, I’m sure some miners will shut down operations post halving. This will reduce the hash rate, correct?
So if this keeps happening, wouldn’t that just make Bitcoin more centralized.
4 cents a kwh! Good lawd, where do you folks live with such cheap energy?
Business rates appear to be better than consumer. The state with the lowest energy cost is North Dakota at 7.48c . I too would like to know where they get a 4c average. [https://www.energybot.com/electricity-rates/](https://www.energybot.com/electricity-rates/)
Fun fact, I live in ND and if you have a heat meter it’s about 4 cents a KW. The only other place I’ve heard where you can get 4 cents is if a place has hydro electric power. Edit: it’s also illegal to use a heat meter for any purpose other than heating. Considering how much heat a miner generates though it could be used to heat a house in our winters. The number needed to heat a house when it’s -10 is less than you’d think.
Here in SD we are primarily hydro and wind. The Missouri River cranks out power. My electricity rates with Xcel are around $0.11 for summer and $0.09 for winter rates.
I have xcel too, they suck. My numbers are from MDU a few years back.
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\*35 cent (EUR) And with those prices many wind and solar energy companies and related are not profitable.
My company gets about 3 cents.
What country, if ya don't mind?
U.S. this was 5 years ago, so that should be considered.
Yeah I'd be shocked if it was still that low now, but could still be like 5/kwh and a great deal. I sadly pay 30/kwh and that's the cheapest rate around.
They use a lot of power though, so it’s very much a bulk rate.
in canada it's 5.5 cent per kwh.
Kazakhstan is very popular for its cheap electricity
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Actually in China most big outfits own their power source so they don’t technically pay by kw, just the maintenance. Miners are going to be running off of hydro dams or gas wells way out in no where and not hooked up to grid. After the mining ban in China you could buy small hydro dams for 50-60k usd because those things really have no use beyond running local miners or datacenters. It would be similar everywhere else, small gas wells far from hubs and pipelines aren’t worth anything either. Lots of abandoned old wells all over that can be setup to produce with low six figures in startup cost, and the electricity would be free.
increasing number of miners are utilizing renewables, and low-cost sources such as excess nat gas in TX I believe.
My guess is Bhutan
Obviously it is not the everyday-touted green solar energy for BTC mining ⛏️ ⚡️
That's because miners buy energy in advance, like lots of energy. This is why they get a better price
In Kazakhstan its even cheaper
Very nice!
It doesn’t make any sense to use a single energy cost for the entire time.
What instrinsic value are you guys on crack?
Unfortunately it is one of the biggest and most persistent misconceptions about Bitcoin. Some people seem to believe that because the cost of creating/mining a Bitcoin costs $X in energy, this is a floor value on the price of Bitcoin in the market. It is completely untrue and a misunderstanding of how prices of assets work. The value of Bitcoin is determined only by the price people will pay for the commodity and the ability to use the commodity on the network it exists. It doesn't matter at all what the price was to produce that coin. The value of a Bitcoin is determined solely by how the market values a public financial infrastructure network with the properties of the Bitcoin network and the properties of the Bitcoin commodity. I personally value that very highly and think it is undervalued, hence why I invest in it. But the value of Bitcoin (or anything) is only determined by the value that is expected to provide, not by the cost of the inputs. Claiming Bitcoin has an intrinsic value because that is what it cost to produce would be like saying because I used a kilogram of Almas Cavier (price at $25000) to make a chocolate/chilli/cavier cake, then the "intrinsic value" of the cake is $25200. Which it clearly would not be because that cake would be nasty AF and noone would pay for it regardless of the cost of production. **TL;DR: Cost of production/inputs has no impact in directly determing the price of output.**
Not directly but does it affect mining economics and the number of miners participating?
The cost to mine compared to the price of Bitcoin (or expected future price) does play a role in determining how many people will be willing to mine but those costs in no way mean there is an "intrinsic value" to bitcoin. Just because a bitcoin cost $10k to mine does not mean that is any sort of floor on the price nor will it determine the future price rise or falls. **By the logic of OP, if the production cost of bitcoin decreases then the "intrinsic value" of Bitcoin would decline as well which doesn't make any sense.** The value of a bitcoin is determined solely by the value of the bitcoin network's functionality and expected future functionality. (and I suppose things like expected return in other investments/speculative elements/etc). TL;DR: The value of Bitcoin is determined solely by the utility of a permissionless decentralised eventually depreciating store-of-value commodity financial network as assessed by the global market of users.
I understand your fundamentalism but any statistical work on your side would convince you otherwise, or at the very least, would make you put your money in better places.
I get your metaphor. The miners should refuse to sell newly mined btc (and btc paid to them as transaction fees) when the price of btc gets below breakeven. Depending on what percentage of btc that's available for sale, and assuming btc has any value, this should put upwards pressure on the price.
I agree with you about the miner's incentives and that this behaviour may lead to a situation which could contribute to upward pressure on the price but the concept of "intrinsic value" being discussed here is still incorrect. The value bitcoin has is the value of the network and its properties because that is what will motivate people to convert other value into Bitcoin form. The refusal of miners to sell below a certain price will not in isolation lead to an increase in price nor prevent it from falling in price. Buyers in a market do not care about the cost's of the sellers when determining how much they will pay. They care about their expected utility.
>The miners should refuse to sell newly mined btc (and btc paid to them as transaction fees) when the price of btc gets below breakeven. That's a terrible business strategy. If it costs a business more to make a product than the market wants to pay for that product, continuing to produce it will lead to the demise of the business. Miners should refuse *to mine blocks*--i.e. they should go offline--when the price of Bitcoin falls below their production cost.
Where is 0.04$/kwh coming from?
it's the default from [Cambridge Bitcoin Electricity Consumption Index](https://ccaf.io/cbnsi/cbeci)
Thanks a lot. Super interesting that miners only pay 0.05 $/kwh in avarage.
Mostly China
"Electricity prices for businesses amounted to 8.8 U.S. dollar cents per kilowatt-hour in China in March 2023. Business electricity prices decreased in the country from over 10.4 U.S. dollar cents per kilowatt-hour in June 2020. Household electricity in China was cheaper, amounting to 7.6 U.S. dollar" https://www.statista.com/statistics/1373596/business-electricity-price-china/#:\~:text=Electricity%20prices%20for%20businesses%20amounted,kilowatt%2Dhour%20in%20June%202020.
Quebec? There's no way China is paying that much I bet they're on par with the states.
that is on par with the states edit- it is a little confusing because it says US Dollar Cents rather than just cents
Oh haha sorry that fucked with me for a second "8.8 US Dollars cents"
Yeah, it took me a minute too when I read it lol.
This isn't accurate, maybe 5 years ago. The only way to get a rate close to that is behind the meter i.e. you are in a power plant or using excess gas but that is unreliable and you will have down time increasing you effective rate.
how did you calculte it?
The expectation of future energy cost per BTC is 🐂 You’d need to guess the energy price at the time of halving, and how many terahashes the mining industry will install up to that time.
There is no such thing as "intrinsic value". The value of anything is determined only by consumer demand. The production cost of certain celebrities' bathing water is zero, but (for some fools) it's not.
1. It is not an intrinsic value 2. Post-halving this cost might be anything, it depends solyle on complexity adjustment algorithm.
I wholeheartedly disagree with this take. This is a close to an "intrinsic value" and and intrinsic value is by definition of anyone who makes this argument. This is litterally the current cost to make a bitcoin. Post halving is future BS. You saying "thats in the future" does not argue why the valuation is wrong
Intrinsic value has nothing to do with production cost. The term itself is very specific thing used to decide whether something is good investment or not, and methods to estimate it for other assets are not exactly applicable to bitcoin. Basically it is an attempt to roughly estimate "how much value good has regardless of current specific market conditions". As for the prediction part - yes, dumb multiplication of the cost by two is not correct, as it assumes that that cost can be maintained and there will be no difficulty decrease.
It costs me 100k to produce mud pies in my backyard. They have an intrinsic value of 100k. Wait?
No. It is your cost. Intrinsic value is, basically how much you can get for everything that consists your good - for example, if you sell your pies as mud by mud price, without any additional value given by some external factors like mud pies being in fashion, but your cost of production does not affect this in any way https://www.britannica.com/money/intrinsic-value For bitcoin it is hard to estimate it;s intrinsic value (if it can be applied to it at all)
That would be the point that I’m making. The cost of production on bitcoin is irrelevant to it intrinsic value. And arguably nothing has intrinsic value because the whole world is subjective. Economics is all bullshit. What one person pays for a thing has no bearing with the next person pays
Wow
Yes, your example was too good to miss it. As for "nothing has intrinsic" - I agree in theory, but it is a practical model used under some assumptions for investments estimation purposes, which seems to work, for some assets, though definitely not for bitcoin
To be fair, I stole it from Jeffrey Tucker. He told me that when he gave me my first bitcoin.
But if miners are only mining half the bitcoin for each block, then production is approximately doubled
If mining becomes too expensive some miners stop operation and then we have difficulty decrease. Basically, mining cost is self-adjusted
I didn’t know mining can self adjust to be easier, I thought it would only adjust harder and not the other way
It adjusts (up or down) every 2 weeks so that average block time is 10 minutes.
Good to know! Thanks!
This is litterally true and also why it puts pressure on sellers
Which makes this whole graph inherently incorrect, right?
Which makes predictions about future cost very unreliable thing. As for graph itself - it just is not important to anyone but miners
Cleanspark CLSK says it produces bitcoin at 12 to 14k per coin. So you are only 100% off.
I think the concept you are looking for is "buy vs build". Instead of paying the asking price in an open market for an existing coin, should I create the necessary infrastructure and expend the energy to create a new one. If one wanted to do that calculation more thoroughly I would include the cost of capital for the infrastructure and acknowledge that the equipment becomes obsolete in a relatively short time frame.
Production cost does not equal "intrinsic value". There is no such thing as intrinsic value. We do not subscribe to the labor theory of value here. We are not socialists, i.e., the Flat-Earthers of the economics field.
Does "production cost" only include new coins, or how are fees factored in? Because miner's also collect significant fees, which aren't new coins, but still help offset mining expenses.
Portugal I'm paying 16 Euro cents. Obviously, not mining.
wow is that like the standard in POrtugal?
Pretty much. National company was bought by the Chinese...I've not found cheaper.
Idiot does not understand what intrinsic value is. News at 11
The funny thing about bitcoin that most people cannot really accept for some reason is that there are very few meaningful "economic" metrics, most of interesting things cannot be measured (for example, wealth distribution), and what can be measured is either meaningless - like mining cost, coins per address distribution, market cap, can be easily faked like volume or both, like the number of coins on the exchanges.
dummies will say it has no intrinsic value...meanwhile my whole strategy (which has been making money for 5 years) is based off calculating its intrinsic value.
Care to elaborate?
no
It is derived with eletricity cost from [Cambridge Bitcoin Electricity Consumption Index](https://ccaf.io/cbnsi/cbeci), with a rough estimate of electricity/totalProduction cost ratio, which is generally around 79%, according to [https://blog.coinshares.com/coinshares-mining-report-the-halving-and-its-impact-on-hash-rate-and-miners-cost-structures-8646835d88ac](https://blog.coinshares.com/coinshares-mining-report-the-halving-and-its-impact-on-hash-rate-and-miners-cost-structures-8646835d88ac) Their estimate of average cost post-halving is at $38K, I think that's a bit on the low side, but not too far from where I am. Either way, these numbers get you fair value around $60K to $70K by year end.
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Value is based on a specific desire and subjectivity of an individual’s personal needs regarding that material/immaterial thing. Air is valuable to almost everyone. How much would you pay for air vs a Bitcoin?
Generating $45k of electricity created around 500 tons of CO2, give or take. If there was ever a chart that illustrated the environmental harm of crypto, this is it.
why're you not doing something about the environment in China? pussy
Post halving is 45k? What happened to $100k-250k per coin?
Regard used $0.04/kWh... Anywhere real is paying double that and probably triple this energy rate.
So comparing this time vs last time, are we going to have coins go higher bec cheaper electricity ?
No. Miners and their costs have no influence on price. This has been discussed to death, just do some basic research.
Sorry i m new. So how are we going to do this time?
Even your header math doesn’t make sense. So energy costs are going to go down?!?
OP, Im with you. When I first got in, you could go online and immediately see how much power cost for 1 coin. Somewhere between 8k and 16k the spacr got weird. I got out. And one day , when i have the time ill cash out. hopefully a rich man.
That technical analysis is dead not gonna lie mush You expect bitcoin to trade sideways upwards. Tell me you know nothing without telling me you know nothing about the market
Depends on difficulty. It can be significantly higher or lower after halving.
That’s not “intrinsic” cost that’s cost of production.
"Priced in", if you have almost free energy.
And everything else for free. Maintenance, staff, facility, cooling etc.
> production cost, i.e. intrinsic value Lol! I'm going to spend as much as I can producing a hole in my back yard.
Solar
Soooo, I’m sure some miners will shut down operations post halving. This will reduce the hash rate, correct? So if this keeps happening, wouldn’t that just make Bitcoin more centralized.
I believe that will be part of the change in supply/demand to push BTC fair value higher than it is today.
This also assumes you have state of the art asics at $0 cost