Bitcoin Forum

"When Bitcoins start having real exchange value, the competition for coin creation will drive the price of electricity needed for generating a coin close to the value of the coin."

What does Satoshi mean here? 1 coin = electricity cost derived from difficulty?

if a BTC is $7.. $2100 per hour .. and you get average 2Gigahash per kwh.. @ 15c per hour... is he saying network speed should be at 28 Thash or 1,900,000 difficulty for $7/btc?

I don't know why he discounts the cost of hardware, that seems at least as important. Maybe he was imagining only CPU mining and considered them "free" since we all have them anyway.

Some graphical-game gamers might suggest that GPUs are similarly free since "they all have them anyway" too.

Do they last longer when not actually doing much number-crunching?

-MarkM-

He clearly imagined that difficulty would rise dramatically, though I don't know if he foresaw mining pools, GPU mining, FPGAs and the like.

Clearly, since this has not yet happened, Bitcoins have not yet come anywhere near the expected exchange value.

Visit your favorite Bitcoin exchange and BUY NOW.

I haven't seen much news on the space-heater and water-heater front lately, but water heaters would be "free" too once "we all have one anyway"... :)

-MarkM-

Sure, but the point is that a bitcoin's value will be so large that you can buy a whole CPU fabrication plant with one. At that point the cost of a single CPU is largely irrelevant.

We may get to that.  Mining has been exceptionally profitable recently because the sudden burst of attention rapidly drove up the price of BTC to the point where people started building these dedicated mining operations large and small.  Difficulty has yet to catch up (though it's trying hard), but when it does and mining becomes a lot less profitable again, those operations are going to suffer from their diseconomies of scale relative to people who have free electricity and/or free computers.

There are some other issues that might reintroduce economies of scale though, so it's hard to say how things really turn out.

I can't tell if you are mocking me for real or for fun.

It's like cow shit man. The price is really low because a bunch of people already have cows for other reasons. It would be dumb to think that the price of cow shit needs to take into account all the expenses associated with cows. Only the marginal costs count and we were at a low margin in the CPU mining world.