The "mining cost price floor": Myth or reality? - page 2.

In several forum posts I've heard that the mining costs, which are (depending on technology, region, etc.) between $5000 and $6000 per BTC, constitute a "floor" for the Bitcoin price.

But I haven't read a convincing theory behind that claim.

One variant which is often mentioned:
When the Bitcoin price drops below the mining costs, many miners would power off their hardware. This would lead to a smaller supply of "mined coins" at the markets.

Even if that occurs (I guess the effect would be rather small) this "smaller supply" is only temporary: it's only smaller until the next difficulty adjustment. So if the hashrate drop was 50% (which would be extreme), that would mean a month of "smaller supply", at most. Would this really influence the price? Additionally, mined coins are only a small fraction of the coins available at the markets.

Variant 2 I read recently:
Some miners are mining BTC to sell them for a more expensive price. If Bitcoin dips below the "production cost", then these miners could buy Bitcoin instead of mining it, and speculate to sell them for a higher price later.

But a miner would only buy if he/she thinks that Bitcoin is undervalued. But in a bear market this is risky. So I don't expect many miners following that pattern.

So these two explanations do not convince me, at all. But the theory is so often mentioned that something may be behind it.

So if you know a better explanation of the "mining cost as price floor" theory, please post it!

Topic: The "mining cost price floor": Myth or reality? - page 2. (Read 317 times)