Topic: Bitcoin miming cost vs bitcoin price (Read 333 times)

There is no economical explanation of running bitcoin farm when electricity cost is bigger than bitcoin price. Even if you invested milions into hardware and after 2 years it will become rabish in compared to new faster and
more economical hardware. Its better to turn off mining farm and pay 1 mil for 500 bicoins monthly than 1 mil for mining 400 bitcoins monthly. Hardware will also degrade faster when running.

Maybe some miners will stop working because the expenses will excess the earnings but we need to remember that less miners means less difficulty so the remaining miners will still get profits but I don't think the mining farms will stop working because they instead huge so they will continue to run for a while even if they faces small loss and they can equalize them when the prices recovered.

Those price are based on energy price for regular user - single family home/apartment. Profesional miners with huge mining factories have very similar mining cost no matter in which country he is.

The price of BTC is determined by supply and demand.  We cannot say that the mining price of BTC is $ 6k  on average as it differ from country to country depending on the electricity cost.
For Example mining cost  of BTC  based on electricity rate is cheapest in Venezuela $531 and in  Ukraine  it is $1.852.
In US it is $ 4.758 , Russia $ 4.674 and in United Kingdom it is $ 8.402 and in Spain is $11.105.
We can see that in some countries the mining cost is highly over the recent  price.

Yea it will only decrise specific price that we are talking about. It can be 6500 (with amortization 500 for hardware and 6000 for electricity) or 6000 (with amortization 500 for hardware and 5500 for electricity). But the subject is about what will happend if we will break that price (no matter if its 6500, 6000 or 5500).

You have to consider as well if the $6000 mining cost is inclusive of all costs or just electricity costs. If it includes hardware costs etc then the point to stop mining will be much lower than $6000. Once the hardware is bought the costs need to be recovered. As long as the actual cost of mining (basically only electricity costs) is lower than the btc price then mining will continue to occur.

6000 $ is a strong support which broken for sure will have huge impact, but i think that it will be caused only by panic, not because we brake mining cost. It will only make few miners to quit. Nothing more.

According to some statistics that I have collected, it can be seen that the cost to exploit a bitcoin is $ 6000, so if the bitcoin price is over $ 6,000 then the bitcoin extraction can bring If Bitcoin breaks the $ 6000 mark, the market will really fall into recession, and bitcoin prices will probably fall even deeper than the competition from the operators.

Yes. Dificulty was 1 then. Now its pumpung every day to current 4 940 bil. Knowing that currently mining bitcoin consume more than 71 terawatt hours per year with dificulty 4 940 bil with dificulty 1 it would be 14 wats? Is it possible or i miss something? 14 wats sims to be so small for computing this amount of transactions per year. It means that it is true that if every bitcoin miner will quit that 1 descktop computer could handle the load?

I've seen this sentences in manny topics:
"Bitcoin will never go below 6000 because its mining cost is in that range"
or questions like:
"What will happend when bitcoin will drop below mining cost. Will it destroy network?"
and my favourite
"If bitcoin price will go below mining cost then noone will mine bitcoins and bitcoins amount will stop to increase what will pump price"
Ill try to explain this as good as i can and i hope to start bigger conversation to extend my knowledge.


"If bitcoin price will go below mining cost then noone will mine bitcoins and bitcoins amount will stop to increase what will pump price"
Bitcoin mining is based on lending computing power for bitcoin network to process transactions. When noone will mine bitcoins noone will be able to transfer bitcoins. Miner reward is based on:
1-bitcoin distribution - its constant amount set in bitcoin code. No matter if there is 1 miner on 1 PC or thousends of mining halls full of GPU (or rather antminers for biitcoin).
2-trasnaction fees - it depends on the number of transactions

Thats why no matter how many bitcoin miner there are there will alwais be the same amount of new bitcoin each month.

"Bitcoin will never go below 6000 because its mining cost is in that range"

There is nothing that will stop bitcoin at this price when supply will be pushing price lower. There is no magic God's hand on market that will stop price and say "stop... no more... noone can sell now... bitcoin miners have to have profit". Life knows dozens of situations when production cost become bigger than market price. Thats why we have "unprofitable" word in dictionary. What will happend? Weak miners (with not the best hardware, not the best energy price, not the best management) will find bitcoin mining unprofitable first. They will stop mining what will lower dificulty for others and bitcoin mining will become profitable at lower prices (mining will be easier and also amount of bitcoin from distribution pool will be divided into a smaller number of miners". To be ohnest that might be good for our enviroment knowing fact that bitcoin network consume the same amount of energy as Hungary.

"What will happend when bitcoin will drop below mining cost. Will it destroy network?"

Bitcoin network will mine 1 block every 10 min no matter what. No matter if there is 1 PC running or dozens of mining halls full of GPU. Every 2016 blocks (exact 2 weeks with 10 min per block) bitcoin network is checking how much time was spent to mine 1 block. If it was lower than 10 min bitcoin network will increase difficulty. If it was bigger than 10 min it will decrise difficulty.

"The target is a 256-bit number (extremely large) that all Bitcoin clients share. The SHA-256 hash of a block's header must be lower than or equal to the current target for the block to be accepted by the network. The lower the target, the more difficult it is to generate a block.

It's important to realize that block generation is not a long, set problem (like doing a million hashes), but more like a lottery. Each hash basically gives you a random number between 0 and the maximum value of a 256-bit number (which is huge). If your hash is below the target, then you win. If not, you increment the nonce (completely changing the hash) and try again." https://en.bitcoin.it/wiki/Target