A more rigorous look at bitcoin's fundamental value

[clickbangdone]

Anybody with $700 can start mining for a current cost of $2 per bitcoin and sell it for 13 times the cost.
So yeah it's a bubble.

If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.

Wake up

But bitcoins are not infinit, as gold.
As far as we know...

It's simple the ease of entering the market means more miners are coming.
I'm sure there's a endless supply of people in the world who would be happy to make 30% on their money mining bitcoins. Which means say goodbye to 15 times your cost of productionin the near future. It doesn't matter about the end supply number of bitcoins. Competitive mining is coming which will lower the price of bitcoins.

The Mining forum is full of people saying mining isn't worth it. They're only saying that to discourage people to mine(they want it to themselves) by saying that it encourages people to buy bitcoins which miners are selling to cover their costs.

[1715649096]

1715649096

[1715649096]

1715649096

[jjbliss]

Anybody with $700 can start mining for a current cost of $2 per bitcoin and sell it for 13 times the cost.
So yeah it's a bubble.

If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.

Wake up

But bitcoins are not infinit, as gold.
As far as we know...

It's simple the ease of entering the market means more miners are coming.
I'm sure there's a endless supply of people in the world who would be happy to make 30% on their money mining bitcoins. Which means say goodbye to 15 times your cost of productionin the near future. It doesn't matter about the end supply number of bitcoins. Competitive mining is coming which will lower the price of bitcoins.

The Mining forum is full of people saying mining isn't worth it. They're only saying that to discourage people to mine(they want it to themselves) by saying that it encourages people to buy bitcoins which miners are selling to cover their costs.

Keep in mind, that because of the difficulty adjustments, more miners does not mean that the supply will increase at a higher rate.  The more miners there are, the less each will get in return, thus making it less economic to generate bitcoins and if anything would increase the price.

[clickbangdone]

Anybody with $700 can start mining for a current cost of $2 per bitcoin and sell it for 13 times the cost.
So yeah it's a bubble.

If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.

Wake up

But bitcoins are not infinit, as gold.
As far as we know...

It's simple the ease of entering the market means more miners are coming.
I'm sure there's a endless supply of people in the world who would be happy to make 30% on their money mining bitcoins. Which means say goodbye to 15 times your cost of productionin the near future. It doesn't matter about the end supply number of bitcoins. Competitive mining is coming which will lower the price of bitcoins.

The Mining forum is full of people saying mining isn't worth it. They're only saying that to discourage people to mine(they want it to themselves) by saying that it encourages people to buy bitcoins which miners are selling to cover their costs.

Keep in mind, that because of the difficulty adjustments, more miners does not mean that the supply will increase at a higher rate.  The more miners there are, the less each will get in return, thus making it less economic to generate bitcoins and if anything would increase the price.

The bottom line. Mining is so profitable at the current price it will never sustain it's current ROI long term.
Mining competition is coming at current bitcoin prices and difficulty. And people will invest money in mining until it becomes unprofitable. To me a in a speculative market like bitcoins at the current difficulty 3 times cost of production seems reasonable.

Do you really think this anomaly of mining for almost free money will continue very long?

[BombaUcigasa]

Do you really think this anomaly of mining for almost free money will continue very long?

Well, for how long do you think it will continue? Do you think all miners will mine at unprofitable rates? Or will they stop? What happens when miners stop?

[sirius]

It's the profit margin of mining that will go down, not the bitcoin value. Growth of the bitcoin supply stays the same.

[Tulkas]

As I understand from this chart http://bitcoin.atspace.com/income.html the daily income per Mh/s is decreasing since October 2010, doesn't seem like a bubble to me.

Am I missing something?

[newunit16]

ok so it seems everyone has taken the OP's word as "gold" (pun intended) and ran with it.

you have forgot something rather crucial, gold indeed is a way to verify your worth by how much you have. you keep it because it is valuable, and its valuable because it is rare AND in demand. it is NOT in demand BECAUSE it's rare, its in demand because it is a very pretty rock. else people would just use celebrity poop as a rare currency that is valuable and in demand because it's rare and celebrities can only make so much over time.

gold is rare and always will be. gold is always in demand because it makes pretty jewelry. this makes it valuable.
BTC is rare and always will be. BTC is not in demand right now (not like it would be under ideal circumstances).
BTC WILL BE in demand when you are able to USE them. when you can spend them like you can the USD at many places. else you're just trading celebrity poop.

maybe one day people will think gold looks ugly and switch to celebrity poop and i can change a few words in this post for great humor!

basically rarity and cost to produce doesnt create demand or value. else the 89 VW Jetta i restored (esoteric reasons) would be worth a shit ton of money to anyone, not just half of what i put into it to the right guy.

[nazgulnarsil]

actually gold has other properties besides being pretty that are more important.  it is fungible and easy to measure the purity of.