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Author Topic: Questionnaire for Miners: What's the value of a bitcoin?  (Read 1916 times)
Marxian
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June 10, 2011, 01:06:13 PM
 #1

To assess the value of a bitcoin according to Marxian economics I ask miners to answer a few questions. We all may find out from the answers how the price of a bitcoin relates to its value. I also hope to convince some of those followers of vulgar economy (as Marx called it) that their contradicting theories of value are wrong. It's important that only miners answer. I regard as a miner a person who has at least some graphic cards running 24/7 to mine bitcoins and who has been mining for at least 6 months. My questions:

1. What did your mining hardware which you are currently using cost?
2. How much did you pay last month for electricity only for mining bitcoins?
3. How many bitcoins did you mine last month?
4. After what period of usage did you replace your mining hardware or, if you have not, when do you intend to replace it?
5. How much did you pay as wages last month? (If you work alone: How much of your income from bitcoins did you keep for yourself, how much did you invest in your mining business or save to invest it?)
6. How much did you pay last month for rent? (the rent for the rooms where your mining hardware is located)

Thank you for your participation. Soon we'll see clearly what the real value of a bitcoin is.
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Jack of Diamonds
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June 10, 2011, 01:26:51 PM
 #2

1. €9k or so last year. It was unprofitable for a long while before this spring.

2. €482

3. About 800, keeps dropping as diff. goes up.

4. Something breaks every few weeks, mostly GPU's dying. 90% stays intact.

5. No wages (I keep 90% in BTC wallet and only withdraw about €2k-3k for living expenses now)

6. $850/month for datacenter rent not incl. electricity.

1f3gHNoBodYw1LLs3ndY0UanYB1tC0lnsBec4USeYoU9AREaCH34PBeGgAR67fx
hugolp
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June 10, 2011, 02:22:29 PM
 #3

In the future, you will clearly see that the market is efficient and tends to eliminate the enterprises that opperate at a loss and forcing producers with high prices to lower them or close, thus producing the long term effect that the price tends towards the cost (note the use of the word "tends").

This does not mean the price IS the cost. If you say that the price is the cost you can not explain why people buy and sell way over and way under the cost. You are basically confusing a market process with how the price is formed.

PS: Btw, the Bitcoin economy is still young and the process of the price towards the cost has not fully developed so you wont probably find for a while what you are looking for.
Arius
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June 10, 2011, 02:52:30 PM
 #4

The price of a BTC on any given day is the exchangeable value of a BTC.  That is, it is "worth" it's price.  Asking the for the cost of production will only tell you what the most efficient BTC mining model currently is.  I would add that any cleaver entrepreneur can cut costs and produce a higher BTCs-Produced/Dollar-spent.  The difference between price and value (that is, value as determined by the financial difficulty in creating a BTC) is explainable as the expectation of returns on the part of either the seller or the buyer.  Think of it this way:  If all sales are short and all purchases are long (Why sell if you anticipate the price rising, why buy if you anticipate the price falling) then each transaction for a BTC represents a difference of opinion on what will happen, plus the costs of producing a BTC, plus the industry standard profit margin.  I'm not a big Marx fan.  Economies are not for pushing out goods.  Economies are for satisfying the pull of human desires.  If you're really into an economics approach to the BTC, read a few chapters of "The Wealth of Nations".  It'll help, this isn't the first new currency.
Marxian
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June 10, 2011, 03:05:25 PM
 #5

In the future, you will clearly see that the market is efficient and tends to eliminate the enterprises that opperate at a loss and forcing producers with high prices to lower them or close,
I don't doubt this. It's interesting what to operate at a loss means in the Bitcoin economy. It seems quite difficult to make a loss when there's a strong deflation. Even if you don't operate at all, you certainly make a profit. Of course, there's still the final crash, which will produce a few winners and and an army of losers.

Quote
thus producing the long term effect that the price tends towards the cost (note the use of the word "tends").
Almost right. The price tends to or fluctuates around the value. Value is not equal to cost. Roughly, value is cost plus surplus value.

Quote
This does not mean the price IS the cost. If you say that the price is the cost you can not explain why people buy and sell way over and way under the cost. You are basically confusing a market process with how the price is formed.
Never said such things. I acknowledge that the price is not the value. That's obvious when one takes a look at the charts. But I'm interested in what the value is. The big price fluctuations can be explained with speculation.

Quote
PS: Btw, the Bitcoin economy is still young and the process of the price towards the cost has not fully developed so you wont probably find for a while what you are looking for.
By looking at the price nobody will find anything about value. You need to look at the composition of the mining capital.
Jaime Frontero
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June 10, 2011, 03:09:04 PM
 #6

the value of a Bitcoin has been a fairly steady number, for me.  mining equipment paid off long ago, and with tweaks and minor hardware upgrades, the exchange rate has roughly kept up with difficulty level (i am not saying it should - or that there's any mathematical relationship between the two, mind you - only that it sort of has)...

here it is:

the value of a Bitcoin is 15 times the electrical costs of mining one.  that is to say, i spend two days of the proceeds from mining on that portion of my electrical bill incurred by mining, and i have no other expenses.
hugolp
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June 10, 2011, 03:12:42 PM
 #7

In the future, you will clearly see that the market is efficient and tends to eliminate the enterprises that opperate at a loss and forcing producers with high prices to lower them or close,
I don't doubt this. It's interesting what to operate at a loss means in the Bitcoin economy. It seems quite difficult to make a loss when there's a strong deflation. Even if you don't operate at all, you certainly make a profit. Of course, there's still the final crash, which will produce a few winners and and an army of losers.

Quote
thus producing the long term effect that the price tends towards the cost (note the use of the word "tends").
Almost right. The price tends to or fluctuates around the value. Value is not equal to cost. Roughly, value is cost plus surplus value.

Quote
This does not mean the price IS the cost. If you say that the price is the cost you can not explain why people buy and sell way over and way under the cost. You are basically confusing a market process with how the price is formed.
Never said such things. I acknowledge that the price is not the value. That's obvious when one takes a look at the charts. But I'm interested in what the value is. The big price fluctuations can be explained with speculation.

Quote
PS: Btw, the Bitcoin economy is still young and the process of the price towards the cost has not fully developed so you wont probably find for a while what you are looking for.
By looking at the price nobody will find anything about value. You need to look at the composition of the mining capital.

You have defined value in a way that its not possible to argue and that its impossible to test in reality. Your "value" concept is an axiom and its also worthless to understand how the economy works.

What everybody else understands as value works as I have explained.
Marxian
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June 11, 2011, 12:29:06 PM
 #8

From xonar's answers I estimate the value of a bitcoin to be about 8 €. This is the value xonar produces. Assuming that he is among the less productive miners with a small capital we may assume that the real value is a few € lower, maybe 4 € to 6 € or $5.5 to $8.5. The difference between value and price of $15 to $25 can thus be attributed to speculation.
asfas16123
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June 12, 2011, 05:00:19 PM
 #9

From xonar's answers I estimate the value of a bitcoin to be about 8 €. This is the value xonar produces. Assuming that he is among the less productive miners with a small capital we may assume that the real value is a few € lower, maybe 4 € to 6 € or $5.5 to $8.5. The difference between value and price of $15 to $25 can thus be attributed to speculation.

lool own datacenter and 500 electricity bill a month small scale?
hes prolly among the top 100 miners on the whole network
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