Is the AVERAGE PRODUCING COST of 1 Bitcoin representative of the lowest PRICE??

[QuintLeo]

If the average production cost = average sale price, pretty much NOBODY would waste time farming as they'd make NOTHING.

 For certain, none of the BIG FARM operators would waste their time with mining if they couldn't make a good profit at it.

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[panton]

Since I've started this thread, the price of bitcoin didnt go under 400 as mentioned in the beginning of our discussion here , simply because there is no more "room" under 400$.

How?

Because the difficulty factor and the COST$ for mining one bitcoin in electricity is about 400$ or higher.

I mean all the miners in the world ( and 400$ is an average between theyr electrical costs, some may mine with free electricity , but most would have to cover theyr monthly bills)

therefor there is no incentive for miners to sell below a certain level , this creates a strong wall at a certain value, review what happened when bitcoin crashed all the way from 1200 to 200 , when it met the producing cost the decline STOPPED.(at around 200$),and the difficulty instead of declining it Tanked.

Now with that difficulty more than tripled we shouldve been in the 600$ area but at the same time more COST effective miners roll out bringing the average cost of production lower.

Toughts?

[QuintLeo]

How does that make any sense? The average producing cost would be the average price. Right?

 Almost NOBODY would farm if the average production cost was the same as the price. No incentive TO farm in that case.


 The COST to mine a Bitcoin right now with current gear is quite a bit less than the current price, unless you have fairly high electric cost.

 The whole theory of "the production cost = the price" makes ZERO sense, most folks AND ALL MAJOR FARMS are in this to make money, and if the cost and the price on the same THEY CAN'T MAKE MONEY.


 The floor at around $400 seems to be more about the major influx of cash in Nov/Dec timeframe when the Chinese markets started accepting fiat currency for purchaces. It has ZERO to do with any "production cost", which is well under $300 and possibly under $200 (if they've replaced most or all of their gear with current gear) for most or all major farms and a lot of home miners. I suspect most of the major farms cost is closer to $200, but I don't have hard figures on the total overhead for any of them (though I have a VERY good estimate on electric cost for most or all of the large farms in Washington state).

 The issue for home miners is achieving ROI on the cost of the MINER, which cost is quite a bit higher per hash than for large farms (some of which buy the chips and build their own miners to save on equipment cost, the rest get large bulk discounts, earlier access, and in the case of the farms run by the miner manufacturers like Bitmain they run at least some of the gear for a while THEN sell it for a large markup making their effective equipment cost ZERO or a negative number).

[mikewillda]

I think the price of the bitcoin has never drop below the mining cost of with considering the electricity.

[QuintLeo]

There is nothing preventing Bitcoin from dropping below the "cost of mining it" - quite a few folks still run old miners that cost MORE to make Bitcoins than their cost, though the LARGE farms aren't wasting money doing that.


 If Bitcoin price dropped through the floor again, what would happen would be a lot of folks turning miners off - and that's likely to happen to a noticeable degree as of the halfing by folks with non-FREE electric running S5/SP20E generation gear and older as they'll be VERY unprofitable at that point unless Bitcoin price almost doubles vs. diff increases in the meantime.

 Even with CHEAP electric, S5s are getting really marginal even now, and SP20Es aren't a LOT better off (though they can undervolt to STAY somewhat more profitable easier than a S5 can).




 After review of the OP, I note that they're talking about the cost of running a bloody NEPTUNE - which is what, 2 or 3 generations OUTDATED by Bitcoin mining gear standards now? No WONDER they think the cost and the price are related, their COST is probably 3-4 TIMES what current miners cost for the same hash power.