So if anyone can bring me additional variables to throw into the equation that could considerably lower the Bitcoin's network uphold cost, I'm all ears!
There are probably a few variables that you haven't included in your analysis.
The first one that comes to mind is the "halving" every four years.
You calculated:
"600*12.5=7500"
But in four years that 12.5 is going to be replaced with 6.25
Four years after that it will be replaced with 3.125
This will continue to reduce the mining revenue unless the bitcoin exchange rate doubles every four years.
I don't know that bitcoin will ever get to $100,000 per BTC, but if it takes 32 years for the exchange rate to reach that target, then the math would be:
100000*0.04882812 = 4882.81"
That's less miner revenue than today.
Another thing to consider is the law of supply and demand. There are costs associated with building additional power generation plants to support bitcoin mining, these costs would be reflected in higher electricity costs which would increase the cost of mining. So the same amount of mining revenue in the future might not buy as much electricity as it does today.
I haven't looked too closely at the maths behind it recently, but I suspect that you've attributed too large a percentage of the revenue to electricity and not enough to equipment and other mining related expenses.
If we do altcoinhosting's maths again, we see that he's made a mistake:
Current network hashrate = 1,819,984,088,000,000,000 hash/s
Antminer S9 = 14,000,000,000,000 hash/s for 1471 Watt at the wall
1,819,984,088,000,000,000 / 14,000,000,000,000 = 130,000 antminer S9 units
130,000 * 1471 = 191,230,000 Watts
24 hours in a day
191,230,000 * 24 = 4,589,520,000 Watt*hours = 4,589,520 kWh per day
The average US electricity use is 911 kWh per month
4,589,520 / 911 = 5,037 households for 1 month
So, if I haven't made any errors in my maths, 1 day of Bitcoin mining currently uses as much electricity as about 5,000 average U.S. households do in 1 month.
(much less than the 170 million household calculated by altcoinhosting)
Your estimate of 36,000 households seems a bit high. Clearly not everyone is running an antminer S9, but anyone mining with equipment half as efficient would have to have costs that are half as much in order to remain profitable. As such, it seems unlikely that the daily electricity use is more than 10,000 households would use in a month.
I'm not sure where you got your $20 per month being the average cost of electricity for a household. Here in the U.S. the average cost is somewhere around $0.11 per kWh. If we multiply that by the average usage of 911 kWh, it's about $100 per month.
So if mining electricity costs as much in a day as 5,037 average U.S. households spend on electricity in 1 month, then daily mining electricity costs should be about:
100 * 5037 = $503,700 per day
With 144 blocks per day, that's about $3500 per block spent on electricity (not the $600 that you estimated).
First of all, I didn't estimate 600$ of electricity. 600$ is the cost of one Bitcoin, which I took to calculate how much revenue miners are doing, and thus how much electricity they are paying, based on the fact that competition pushes the price down to the threshold that miners have to keep afloat by paying electricity, hardware and rent.
And because of this I tied Bitcoin value to the cost to mine it, which I am sure isn't coming as a surprise at all.
My actual calculation was of 5000$ of electricity per block, aka every 10 minutes.
Which brings to 5000$ * 6 =30000$ per hour.
Which brings to 30000$ * 24 = 72000$ per day.
Which is far less than your calculation (500000$) only because I consider 20$ for household bill per month, and is really not far off from your calc if you used my 20$ bill per month, bringing to 5000$ * 20 = 100000$.
Or to say it better, you paint an even worse situation than I paint.
Your estimate of 36,000 households seems a bit high. Clearly not everyone is running an antminer S9, but anyone mining with equipment half as efficient would have to have costs that are half as much in order to remain profitable. As such, it seems unlikely that the daily electricity use is more than 10,000 households would use in a month.
But you shouldn't consider what a person is using as hardware. We are talking in general here, so the only factor we put in here is total consumption per time.
The only thing that I can acknowledge you, is that I have no sharp knowledge of how much electricity is needed to mine a block. But that's variable also on which hardware is run.
And that's why I base my calcs on miners income: because they are this is probably the most reliable source.
Miners are making Bitcoin prices based on what they can cut off after paying all the expenses.
And they make it based on market of course, and they lower prices because of competition, but they can't put prices below costs.
I get that 20$ for house, because that's what I spend where I live in Italy, and I'm not even paying much. North of Italy is more expensive.
But USA is not the world. The world is using far less electricity than the average american, in case you didn't know.
Also 11 cents per kWh is cheap when compared to Europe. Italy is known for its high electricity cost and I've just checked: it's well over 20 cents per kWh.
However, we can raise that to 30$ or even 50$, as I said: the problem here is not of 1 or 2 or 3 or even 5 measures, it is of order of magnitudes.
So to conclude, you paint an even worse picture than I paint, by just a 30% or so... but still, I am not far off from your measure and Bitcoin mining is sustainable now, but it won't in the future when the price will reach what we all expect it to reach.
