Bitcoin production cost

[Batis13]

Hi my friends ,
I want to calculate Bitcoin production cost . I searched the net and found a few articles about the production cost , but none of them was a clear solution for this , If anybody knows how to calculate the real production cost for bitcoin or has any idea about that , please help me .
I know the general answer and even the correlation between bitcoin prices and power consumption or other related factors . But that's not enough , I need more specific formula and calculation .
Any idea will be very appreciated .

[jackg]

Look for mining calculators? I don't know what you're after?

The cost of running a miner is its power usage times the price you pay per unit. This changes based on your country...

If you're checking if it's profitible check your bill and see how much you pay per kwh...

[Batis13]

I didn't search for profitability of a mining hardware , I just want to know the real cost of bitcoin production .
However its the mining process that generates new bitcoin as block rewards but thats not what I am searching for .
Please look at this link :
https://coinsavage.com/content/2019/12/bitcoins-production-cost/
Maybe it shows my idea better .
For ex. It uses a parameter called PUE in calculation of BTC production cost .

[jackg]

1st problem with that study is its based on average efficiency since 2014, which is rediculous. I doubt wanyones still using an S5 these days...

You're better off looking at how many S17s or equal and high efficiency are being used (batch numbers probably get published somehwere). Or taking the average consumption of all miners from then and determining how much energy they'll need and multiplying that by the amount of mining power...

Studies are going to be useless on this as its just an estimate until you can get actual figures of units sold or pay a mining pool to tell you...

[Batis13]

The link I mentioned is just an example for make my word clear ,
I searched and read a few other links like that which found in internet .
I do not want to calculate the profit value of Asic devices , just want to calculate a base price for each bitcoin mined , and so to find out the minimum price level which minners can handle it .

[mocacinno]

If you would use an S17 and solve a block and getting the coinbase reward (12,5 BTC, but going to be 6.25 BTC pretty soon) + the fees, the cost would still be different based on many factors.

There are places near hydroelectric dams where you pay 1 cent / Kwh (vs 30 cents/Kwh in some places in the EU), there are places where you can rent a building for a couple hundred dollars a month (vs several thousand dollars in some places), there are places where the basic income is just a couple dollars a day (vs > 1500 euro/month in some places).

IF you would want to calculate the average cost of 1 BTC, you would have to know:
- How much ASICs, which type and which batchnumber are currently mining on the main net
- Where they are running their ASIC's
- What the power cost is for each of these places
- How much the worker are payed in each mining facility
- How much the buildings cost for each place where an ASIC is running


Bottom line is: there is no information in the block as to who solved it, which hardware was used, where the miner was located... Sometimes you can find which pool the miner was using, but that's about it.
If you really wanted to solve this equation, you'd have to get a list of every buyer of every piece of hardware from all the ASIC vendors, then contact each buyer, find out where his ASIC is currently running (if it wasn't turned off), and get all the variables from each buyer (power price, labour cost, mining room cost,..)

Since this is impossible, the best you can do is work with averages... Get the specs of a reasonably new ASIC, look at the network difficulty, calculate how many of those reasonably new ASIC's are needed to push the diff to the current level... Then find out the average power cost, the average income, the average serverroom cost,... Apply those average to the number of ASIC's (and their specs: power draw, number of U's needed, amount of maintenance needed, average income,...) and you have an estimation... Not a real number, just an estimation...

[Batis13]

Thank you for your complete description .
Indeed I want to find a formula for estimating the production cost values and not the exact prices .
Because as you said very well , That's impossible ! So many factors for exact calculation is needed and no one can do it .
I just need to know the approximate base price of Bitcoin production cost .
In the paragraph you showed me the path .
I think I must use the total network difficulty , BTC hashrate , average power cost and a few other factors to design a general formula for this calculation . That is what I was searching for .

[mocacinno]

Thank you for your complete description .
Indeed I want to find a formula for estimating the production cost values and not the exact prices .
Because as you said very well , That's impossible ! So many factors for exact calculation is needed and no one can do it .
I just need to know the approximate base price of Bitcoin production cost .
In the paragraph you showed me the path .
I think I must use the total network difficulty , BTC hashrate , average power cost and a few other factors to design a general formula for this calculation . That is what I was searching for .

In that case, look here:

https://en.bitcoin.it/wiki/Difficulty

D * 2**32 / 600

This is the formula to estimate the hashrate (in hashes/second) based on the difficulty.
At this moment
hashrate = 15958652328578 * 2^32 /600

So, the estimation of the networks hashrate is 114.236.483.065.794.593.641 hashes/second

That's 114.236.483 Th/s

Now, let's take a reasonably recent version of bitmain's antminer, the S9... Some will use a better asic, some will use the S9, some will use older hardware... But for this estimation, i'd guess that the "average" ASIC is about an S9... If the actual average ASIC is more recent than the S9, the total power draw will be lower than what i estimate, if the actual average ASIC is older than the S9, i'll underestimate the power draw.
Hashrate of the S9 = 14 Th/s, power consumption is 1375 Watt.

So, you'd need about 8.16 million S9's running to provide the current estimated hashrate.
This many antminers would draw 11.219.654.580 Watt (11.22 Gigawatt)
The daily power consumption would be ~270 Gwh

The estimated power price is something you have to figure out for yourself, cause this is where the math stops...
If you estimate most of the mining power to be located in countries with cheap power, you'd have to estimate a lower power price than the global average, otherwise a higher one... If you estimate most of the mining power to be located in low wage countries vs high wage countries... If you estimate most of the ASIC's running in a server room vs at home (with no extra shelves, ups's , network infrastructure, cooling, security,...)

[Batis13]

Very well .
I searched the net and found this link :
https://www.globalpetrolprices.com/electricity_prices/
So we can continue the calculation from this point
The total daily power consumption due to your calculation is about 270 Gw per day  Or about 11.22Gw per hour .
Total bitcoin production for each hour can calculate :  6 * 12.5 = 75 BTC (Before halving) .
The average electricity cost between the most important countries can calculate like this :
(Related to their contribution in minning)
This link : https://www.buybitcoinworldwide.com/mining/pools/

 contribution among minning pools :
China - 81%  
Czech Republic - 10%
Iceland - 2%
Japan - 2%
Georgia - 2%
Russia - 1%
Electricity prices for business :(USD / KWh)
China = 0.09
Czech Republic = 0.08
Iceland = 0.06
Japan = 0.21
Georgia = 0.05
Russia = 0.08

Average price (calculated base on above) : 0.0899  USD/KWh
Total power consumption prices (per hour) :
11.22 * 10**9 * 0.0899 / 1000 = 1,008,678 USD for total 75 bitcoin (in an hour)
Finally the estimate product cost can be :
1,008,678 / 75 = 13,449 USD per Bitcoin !!

So the production cost for each Bitcoin is 13,449 USD .
Is this possible ?
May be I made a mistake .
Any Idea ?

[mocacinno]

I doubt that the chinese mining pools pay more than 1 or 2 cents/kwh.

I've heared rumours that a lot of those mining companies are located near hydroelectric power plants, with a production cost of less than 1 cent/Kwh.

Also, this calculation is based on S9's, maybe they're running more performant hardware?

And last (but not least), you didn't include the fees... Only the block rewards.

On the other hand, you need to substract costs for the server room, labour costs,...

If you drop the average power price to 1 cents/kwh, you'll end up with something like ~$1500/BTC, and the current preev rate is $7100.
If you drop the average power price to 2 cents/kwh, you'll end up with something like ~$3000/BTC, and the current preev rate is $7100.
If you drop the average power price to 3 cents/kwh, you'll end up with something like ~$4500/BTC, and the current preev rate is $7100.
If you drop the average power price to 4 cents/kwh, you'll end up with something like ~$6000/BTC, and the current preev rate is $7100.
If you drop the average power price to 5 cents/kwh, you'll end up with something like ~$7500/BTC, and the current preev rate is $7100.

[Batis13]

Yes , you are right .
I forgot to add fees . If we can calculate an average total fee per hours for the whole network we can add this (estimated) value too .
About the server room's price , labour costs and other , I didn't add them on purpose . Because I want to calculate the base price so we dont need them .
And yes , again you are right about the type of Asic devices which uses more and even about the electricity price in China.
I think we need more information to calibrate this calculation .

[Wenbing]

<snip>

I do not want to calculate the profit value of Asic devices , just want to calculate a base price for each bitcoin mined , and so to find out the minimum price level which minners can handle it .

Well, I don't really know the purpose for question. Are looking to analyse the production cost per bitcoin and the revenue per bitcoin to determine its profitability?

A key cost factor is the level of electricity consumption. The higher the kilowatts of electricity consumed the higher the cost of bitcoin mining.