Topic: Miners running costs must pass trough exchanges - this limits the Bitcoin price - page 3. (Read 7335 times)

Hi mestar.

According to BitPay blog:

According to my chart, the current minings cost is about $100 per bitcoin. It's just an electricity cost.

And there are 3600 bitcoins generating every day.

So capacity to work for our crypto-currency costs $360,000 dollars every day, or $10,800,000 per month.

And we have just $6,400,000 of real operations per month.

Is that all a big ponzi-investment game or have I missed something?

Miners running costs must pass trough exchanges and this will always be a downward pressure on the Bitcoin price.  Why must costs go trough the exchanges?  Because miners must pay their bills in currencies other than Bitcoins.

It's easy to estimate the combined running costs of all the miners, because they will always tend to the amount of total mining awards given.  This is due to the fact that mining is in a near perfect competition situation, and thus the profit margins will always be low.   

There are periods where profit margins could be temporary higher, like when the price of Bitcoin price jumps 30 times up, or when there are delays in delivering mining hardware, as was happening in 2013.   

So, what does this means for Bitcoin price?  It means that the higher the price of Bitcoin is, the higher the selling pressure becomes.  So, for Bitcoin to be a store of value, this must be offset with fresh buyers on the exchanges.

And this puts a limit on how high the price can go. 

Currently, this means that the total mining costs can go up to $3.6 million daily (price of $1000 per Bitcoin).  So, once we reach a somehow stable state, (where difficulty is not doubling each month), there will be a, perhaps $2 million of fresh cash needed to keep the price stable.

Also, when somebody says that Bitcoin can go up to $100,000 per Bitcoin (as Max Kaiser did), this means that there will be perhaps $200 million fresh money daily needed to prop up the price.   So, we can safely say that Bitcoin will never be that expensive.