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Sidenote: It currently costs miners ~$10K to produce 1 BTC.

• ForHackernews 6y ago
  This is only relevant because if the price of BTC drops below this, many miners may shut down their hardware. The amount of money & electricty wasted to generate a BTC is otherwise unrelated to the price of BTC in dollars or other assets.
  • ric2b 6y ago
    > The amount of money & electricty wasted to generate a BTC is otherwise unrelated to the price of BTC in dollars or other assets. Isn't it _directly_ related? If I'm a miner and the BTC I'm mining doubles in value I can afford to spend 2x as much money on hardware/energy and still make a profit.
    • ForHackernews 6y ago
      You've reversed the directionality: price drives mining activity, but mining activity doesn't determine the price. Miners spending more on hardware & energy won't produce more bitcoins (it just means the difficulty will increase and more CO2 will be released). I'm saying the fact that you have to waste $10,000 worth of electricity calculating redundant hashes in order to make a bitcoin doesn't mean that bitcoin somehow contains $10k worth of "value" or that the cost of production sets a floor on the price. People sometimes get confused about this, perhaps reasoning by way of analogy with real-world goods that will (typically) never be sold for less than the cost of their inputs, or they imagine some computerized form of the labor theory of value applies[0], but this is not true. The only factors determining the price of bitcoin are supply (fixed) and demand (driven by speculation). [0] https://en.wikipedia.org/wiki/Labor_theory_of_value https://en.wikipedia.org/wiki/Labor_theory_of_value
      • deleted 6y ago
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