Topic: True Value of BTC (Read 303 times)

To know the value or worth of any commodity demand and supply is important ,because is when there's demand that producer will produce more good and supply them. And for bitcoin it will be difficult to calculate the value because the price is not stable,well the miners may be able to calculate the cost of mining by calculating cost of electricity or fuel for generator,or any other thing they use for the mining.

That kind of valuation is hard as there are many factors to consider. The labor, equipment, taxes, etc. In terms of gold price, the mining cost has long been established and they just add other things on top of the basic mining cost. Aside from that, the supply and demand finally determines the price. So maybe, the OP is asking about the cost of equipment, energy consumption, labor on how to mine for example 1BTC. But this one depends also on what miner you will use, how long you will mine (energy consumption), people involved, and tax. In that case, maybe the OP wants to calculate this via mining calculators like - https://whattomine.com/.

When you talk about the sales performance, then you are still talking about the demand and supply that the OP had said to be removed. In this case, I wouldn’t say that shares is the right thing to be using as an example, because shares are basically all about the level of demand and supply or should I say sales performance in a company, and the shares in a company wouldn't have any value at all if there are no sales performance or demand and supply in that company.

But in Bitcoin, you have to mine it which means that it is quite different. Before you mined it, there were things involved. Will say that Bitcoin is like gold, what does it cost to mine a gold?

The value for most things usually comes from the demand and supply. But, if you should take away the demand and supply, maybe we would say that the value should come from the cost that it takes to produce that product. So, maybe we can use another product in this context, let’s say for example a bottle of coke: if we are to say what’s the value of a bottle of coke, then we would have to talk about the ingredients that were used in making that coke, and if what it cost to make that Coke was $10, maybe we can say the value is $10 , because that’s what it cost to produce it.

And if you are going to sell it, you already know for sure that you wouldn’t be selling it anything below that $10, if you do, then it’s going to be a loss for you. So for Bitcoin, we can say that the cost for mining one Bitcoin should be the value for it I guess. But at the end, if something doesn’t have demand, then it’s of no use.

It's the same as ethereum and dogecoin.

Not sure if its more or less than an NFT

I feel that just saying that Bitcoin is not a product doesn't really explain it. The price of a bitcoin is not influenced by its production cost because production is fixed. Producers (miners) can't adjust production in response to price, so they have no influence over the price, in contrast to most other products.

I also want to point out that value and price are different, but related. Value is subjective. The value of a bitcoin is higher to a person that wants to buy it than to a person that wants to sell it. Price is an objective measure of the aggregate value.

Funny thing is that you are using numbers that satisfy your conclusion otherwise as I've told you elsewhere and you ignored it the cheapest electricity cost is $0.002/kwh in other words your minimum is 20 times higher than the actual minimum.

You are ignoring the size of the market. There aren't enough "hobby miners" that would buy bitcoin in your scenario to have any kind of effect on the price.

You are looking at this from the wrong perspective, it seems that you think that just because something costs X to produce then that is its value, but things do not work like that, that is the labor theory of value which is closely related to communist ideas, but this is wrong, just take a look at shitcoins, it takes you a certain amount of money to mine them, however if the development is awful then you will never recover your investment, it does not matter how much money you spent you will never recover it as the coin was not worth it.

So it does not mater how much money was necessary to mine a bitcoin, the value of bitcoin, and anything else by the way, depends on how much people are willing to pay for it.

The Value and the Price aren't the same things. Most likely you mixed it. The value of Bitcoin totally depends on how people are adapting it and how the community growing. It's because Bitcoin is a decentralized cryptocurrency backed by the community. As much as the real use case increase, the value increases as well.

On the other hand, price fully depends on demand and supply. Nothing to do with the mining cost. Miners are making a profit, so whatever the cost it won't hire than the price they earn. Price always moves based on buyer and seller emissions.

But even the value of a product isn't based fully on production cost. Take GPUs, for example. It can cost, say, $400 to manufacture (including salaries and stuff), it can allegedly be sold (MSRP, I mean) for $750, but actually cost $1800 on the market. So even for products there's a great gap between the production cost and the product's value. So with Bitcoin I guess it's just exacerbated because the demand and supply play an even bigger role, but it's not like a product is defined by its production cost either.

funny thing is..
for years i have been running charts of the cheapest and most expensive mining costs.. and treated that as a value window.
and in 99.99% of chart plots the price sits within the mining cost value window.

check one example recently
https://bitcointalksearch.org/topic/m.59053731
the blue and purple line is mining cheap-premium. and if you look at the peaks and valleys of mining cost. and then look forward a few days,weeks the price then follows with a peak or valley.

this is because when it costs more to mine, for instance in USA than the price is. hobby miners switch off their asics to then buy. which then makes the price rise with the mining cost.

when its cheaper to mine than the price. people turn on their miners and stop buying.
check out the april mining cost dip. and then the price dip in may
check out the june mining dip due to china.. and then the price dip in july

yes the november 2021-jan2022 is a bear sign where prices decrease even when the costs dont, but that shows the cheapest miners remained bullish from jun-december even with a market being bear november-december.. but even so even now today the price sits within the value window of cost. the bottomline blue are the cheapest miners on the planet and they only react when their profit margin gets small. they dont react daily, weekly monthly they only started reacting in january this year and only a small amount of them cheap asics miners reacted

Surely the OP is familiar in some way with the concept of fair or objective value that is applied to companies to calculate the value of shares and buy or sell accordingly. Broadly speaking, you account for the assets and liabilities of the company, taking into account some other things (like sales performance over the last 5 years, and some projections) to calculate a value that divided by all the shares of the company tells you whether to buy or sell.

But Bitcoin is essentially different in this sense, as already noted. We cannot calculate a true value with which to know if Bitcoin is overvalued or undervalued at the moment, for that there are other indicators, such as the fear and greed index and others, but for those of us who believe that the Bitcoin will play an important role in the history of mankind and therefore in the long term will rise a lot in price, Bitcoin is always undervalued.

First of all Bitcoin doesn't have a global adoption it value relies on the constant supply and demand of this said digital asset meaning if by chance investors decides to dump Bitcoin completely it would result to a 100% useless commodity same thing is applicable to legal tenders if the citizens decides to abandon it, it losses its value completely

Seems like you're asking two different questions -- the costs associated with mining and the value of BTC within the context of mining costs...so you're essentially asking what the profit is?

There isn't anyone that can answer that -- BTC's price is not at a fixed position, setting aside the varying costs of mining. A bit of a pointless question to ask. The "true" value of BTC is not calculated by taking the asking price subtracted by the mining cost because you're assuming the asking price is fixed.

There's no exact value of mining Bitcoin since it's vary by the difficulty, electric cost and mining rigs you used to mine. Back in the days where you can mine using CPU or GPU with low difficulty, but nowadays you need good rigs in able to mine it.

I'd say the mining cost isn't the true value of Bitcoin, it's different with production cost where the product isn't scarce and you can produce whatever amount you want. The true value of Bitcoin is 1BTC = 1BTC.

I definitely agree with you here because some days ago I read this post, https://bitcointalksearch.org/topic/--5381365 Back then Bitcoin didn't have the type of value we see in it today hence the winner of the 25BTC did not accept them rather asked to be paid $40 instead. Source So it is safe to say that the true value of Bitcoin is what people are willing to pay which has been dynamic over time.

The cost of mining is different in different areas and regions as mining cost depends upon a number of factors, the major one being the electricity cost. However, the true value of bitcoin is not calculated by average mining cost. If you calculate this price, it will be the minimum price of bitcoin and not the fair value. The true price of bitcoin is what people are willing to pay for, in order to buy bitcoin and this true value will increase with time as more people invest in bitcoin.

Franky1 being Franky and again talking about things he doesn't have a clue about.

https://www.sec.gov/Archives/edgar/data/1874985/000121390022001845/fs12022a5_rhodium.htm#T17


https://www.globenewswire.com/news-release/2021/11/30/2342749/0/en/Bitcoin-Self-Miner-Griid-Infrastructure-to-List-on-the-NYSE-Through-Merger-With-Adit-Edtech-Acquisition-Corp.html

https://www.datacenterdynamics.com/en/news/bitcoin-miner-marathon-signs-coal-fired-electricity-montana/

Should I post more?
Of course, all those mining companies are stupid and you know better than everyone by simply splitting the hashrate with the most efficient gear that this is the rule for everyone and that's it. At no point has in your little tired brain came the idea that some of the miners have long ROI with gear that was in place for years, so they could still afford to run it at a simple margin rate of 10% not even caring about stupid generalistic computations. There are poeple on this forum who have mined with that gear for 2-3 and even 4 years, they have ROI already and they couldn't care about those split costs of your, meaning that the actual pie for everyone else starting mining is far bigger.

Let's not even count the fact that in October 2020 the hashrate was 140exa, the price was 10k, how the fuck would that be possible with gear 3 times less efficient, the minimum cost per coin was 500K then?  

But I have to love the fact that you even dare to actually believe somebody is mining with 37 cents per kwh, because it makes so much sense!!!!

If we talk about true value, it is different from the value induced by cost of production. You might spend much in producing a product, but the product will not be of any value. Value is proportional to demand.
I will only demand for something that is valuable to me.
Then in the other hand, bitcoin is not a product.
Let us see bitcoin as a currency. So, can the value of US dollar be determined by the cost of printing it?
I believe that value according to cost of production is only applicable to the genesis and early mining stage of bitcoin.

Bitcoin price of course can experience up and down every day, bitcoin can increase to the highest price at any time, but it can also drop sharply to the lowest price (no price at all), This condition is called (price fluctuation).
What makes the price of bitcoin have value is supply and demand, bitcoin Cannot be controlled by Commodities Like fiat money. The mechanism of supply and demand for fiat money is always controlled by the central bank. This does not apply to bitcoin.
Until now, no particular authority has dared to intervene when there is an "unreasonable" supply and demand for Bitcoin. So for that reason it is not impossible that the price of Bitcoin could head towards the bubble if the demand is out of control.

About the amount it costs to produce 1 BTC in terms of mining costs, already explained in great detail by @franky1.