Lowest Bitcoin mining cost

[BlackHatCoiner]

Price determines the hashrate, not the other way around.

If you find a way to mine bitcoin with very low cost, won't that influence the price? The total bitcoin entering the circulation will remain 450 every day, but your share increases, and that alone, can influence the price.

Let me give an example. Suppose we have 450 EH/s total hashrate. You find near zero electricity cost in Hypothetical-Islands. It only takes $10,000 to mine a bitcoin there, while it costs $50,000 the least to your competitors. Since you're with $56,000 profit for every bitcoin mined, you decide to make a big investment in infrastructure, mining at 50 EH/s. Adding this to 450, and total hashrate becomes 500 EH/s.

Your competitor might be selling it at $51,000 to make $1000 profit, but you can drop it a lot less than that, making it unprofitable to them. Then, they'll have to shut down their operations, and you can take their hashrate by expanding your operations in Hypothetical-Islands. You're practically taking a large portion of the pie, and have the flexibility to sell it for a lower price than your competitors, while expanding the hashrate.

Have I missed anything?

[stompix]

Price determines the hashrate, not the other way around.

If you find a way to mine bitcoin with very low cost, won't that influence the price? The total bitcoin entering the circulation will remain 450 every day, but your share increases, and that alone, can influence the price.

Instead of a guy with 30k cost mining half of them you have a guy with 20k mining half, would this make the price drop?
If it would then every new piece of gear every cheaper source of energy discovered would just take the price lower which doesn't happen.
Mining profits have dropped almost ten times since 2021, the price is the same....
https://bitinfocharts.com/comparison/bitcoin-mining_profitability.html#3y

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You're practically taking a large portion of the pie, and have the flexibility to sell it for a lower price than your competitors, while expanding the hashrate.
Have I missed anything?

Yup, for starters you're thinking of price manipulation but just one way around and not of the second stage.
If I would use this to bankrupt the competition, once the competition is done for, and my cost are 1/5 of the mined bitcoin I would just sell 1/5 to cover my expenses, so it would mean the price would go back up again as less coins are released, making me sell even less but at the same time making competition again possible, the wheel keeps turning. In order to drop the new contenders I would have to drop the price again, and then again...

Miners can't manipulate the market, not when BR has acquired in 4 months 600 days of block rewards, if miners had been able to Core, Argo, Compute would have not entered bankruptcy, Stronghold would not be for sale, and many many more, I think the big guys in US alone have more than 40% of the production, with their shares 1/5or 1/5 compared to 2021 they would have tried everything to manipulate the price but they simply can't, that's why we're at 5 cents per the right now, lowest ever!

The problem is that while you can manipulate daily supply you don't have a fixed demand, not like food or oil, there is no way in RL that with a 100million barrels of daily production suddenly somebody finds a locked deposit and decides to dump 1 trillions of oil (4500 coins compared to 450 daily mined) on one day or that next day everyone says no more oil and demand crashes to zero but also people take the oil back to the refineries (ETF outflows).
Unfortunately for us (miners) the daily reward is a drop in the ocean and the amount that can be held from entering is peanuts, trust me if we could have colluded to do something price would be at 300k already.

[cryptosize]

When asked if the updated bitcoin production cost estimate of $45,000 implies that JPMorgan expects the bitcoin price to rise to that level, Panigirtzoglou told The Block that while the current bitcoin production cost estimate stands at $45,000, it still maintains the $42,000 level for the medium term.

Why do they keep with this stupid assumption?
Bitcoin is not mining for coal or drilling for oil, you can't cut production, there will still be 450 Bitcoin mined every day, and you can't support the price if something is more expensive to mine, you will just have some miners quit and the ones in profit will keep on mining, mining cost will NEVER influence the price!
If such thing were true then all the community would have to do is invest just 10 billion in gear and voila, the hashrate is doubled, the cost per Bitcoin is doubled do suddenly we're at 90k per coin and we have gained 500 billion in market cap, but things don't work like this!
Price determines the hashrate, not the other way around.

It goes both ways. Unless you really think JPMorgan doesn't know what they're talking about.

10 years ago the hashrate was a lot lower, therefore the mining cost was also lower.

Miners have to sell at a certain price to break-even. 10 years from now the mining cost will be a lot higher, I reckon.

Back in 2009 the mining cost was dirt cheap due to CPU mining, that's why you saw people selling 10k BTC for €20.

The harder it becomes to mine a single BTC, the more miners will have to charge for selling their BTC.

And vice versa, back in May 2021 we saw a huge hashrate reduction (China miner exodus) and a BTC price reduction at the same time. It's a self-regulating mechanism.

Btw, solar panels of 410W cost €79.99 currently. An array of 20 panels seems dirt cheap for a typical household.

ps: Suggesting that TSMC can ramp up their 3nm wafer production, so that the hashrate will be doubled in a short amount of time is a pipe dream.

The BTC network grows organically.

TSMC also has to produce chips for Apple, Nvidia, AMD etc. That also makes 51% harder to achieve, unless pools decide to collude and destroy their precious income.

Price determines the hashrate, not the other way around.

If you find a way to mine bitcoin with very low cost, won't that influence the price? The total bitcoin entering the circulation will remain 450 every day, but your share increases, and that alone, can influence the price.

Let me give an example. Suppose we have 450 EH/s total hashrate. You find near zero electricity cost in Hypothetical-Islands. It only takes $10,000 to mine a bitcoin there, while it costs $50,000 the least to your competitors. Since you're with $56,000 profit for every bitcoin mined, you decide to make a big investment in infrastructure, mining at 50 EH/s. Adding this to 450, and total hashrate becomes 500 EH/s.

Your competitor might be selling it at $51,000 to make $1000 profit, but you can drop it a lot less than that, making it unprofitable to them. Then, they'll have to shut down their operations, and you can take their hashrate by expanding your operations in Hypothetical-Islands. You're practically taking a large portion of the pie, and have the flexibility to sell it for a lower price than your competitors, while expanding the hashrate.

Have I missed anything?

Nuclear fusion could be the Hypothetical Island, but we won't see it before 2050.

[stompix]

The harder it becomes to mine a single BTC, the more miners will have to charge for selling their BTC.
And vice versa, back in May 2021 we saw a huge hashrate reduction (China miner exodus) and a BTC price reduction at the same time. It's a self-regulating mechanism.

You just managed to destroy your theory one line after 
If there was a huge hashrate reduction, that means the remaining miners had more income , they were getting twice as many Bitcoins for the same consumption so why they would have to be forced to dump like previously, cutting offers to the market so, but why did the price have to go down so sharply exactly after the news while the hashrate was still intact?
The price went down because it was bad news, price dropped nearly 40% in one week, the rate dropped continuously for one and a half months afterward while ironically the price started to surge, so which one is it? Higher prices because of lower costs or lower costs and lower price or as we see now record both? 

I know the feeling, it's normal for people to try to see patterns in something, to try to establish causation and correlation but, it's simply not here in this case.

Btw, solar panels of 410W cost €79.99 currently. An array of 20 panels seems dirt cheap for a typical household.

And with 8 hours of peak sun (Germany gets 5 on averge), you need 30 of them for one miner, so ~$3000, then an equivalent of at least 24kwh of battery storage (at least), and all that to make 10$ a day from a $5000 upfront machine, dirt cheap you say?

[philipma1957]

The harder it becomes to mine a single BTC, the more miners will have to charge for selling their BTC.
And vice versa, back in May 2021 we saw a huge hashrate reduction (China miner exodus) and a BTC price reduction at the same time. It's a self-regulating mechanism.

You just managed to destroy your theory one line after 
If there was a huge hashrate reduction, that means the remaining miners had more income , they were getting twice as many Bitcoins for the same consumption so why they would have to be forced to dump like previously, cutting offers to the market so, but why did the price have to go down so sharply exactly after the news while the hashrate was still intact?
The price went down because it was bad news, price dropped nearly 40% in one week, the rate dropped continuously for one and a half months afterward while ironically the price started to surge, so which one is it? Higher prices because of lower costs or lower costs and lower price or as we see now record both? 

I know the feeling, it's normal for people to try to see patterns in something, to try to establish causation and correlation but, it's simply not here in this case.

Btw, solar panels of 410W cost €79.99 currently. An array of 20 panels seems dirt cheap for a typical household.

And with 8 hours of peak sun (Germany gets 5 on averge), you need 30 of them for one miner, so ~$3000, then an equivalent of at least 24kwh of battery storage (at least), and all that to make 10$ a day from a $5000 upfront machine, dirt cheap you say?

solar is cheap the panels last for 30 years inverters last for 10-15.  Just tie into the grid and they work fine for mining.

[cryptosize]

The harder it becomes to mine a single BTC, the more miners will have to charge for selling their BTC.
And vice versa, back in May 2021 we saw a huge hashrate reduction (China miner exodus) and a BTC price reduction at the same time. It's a self-regulating mechanism.

You just managed to destroy your theory one line after 
If there was a huge hashrate reduction, that means the remaining miners had more income , they were getting twice as many Bitcoins for the same consumption so why they would have to be forced to dump like previously, cutting offers to the market so, but why did the price have to go down so sharply exactly after the news while the hashrate was still intact?
The price went down because it was bad news, price dropped nearly 40% in one week, the rate dropped continuously for one and a half months afterward while ironically the price started to surge, so which one is it? Higher prices because of lower costs or lower costs and lower price or as we see now record both? 

Higher hashrate = higher difficulty = higher mining cost
Lower hashrate = lower difficulty = lower mining cost

As simple as that. Do you honestly think BTC would retain its current price if everyone abandoned it? No, it would drop to 2009 prices.

Some miners sell regularly (because they have to pay their bills), while others are hodlers/speculative miners (they're even willing to mine at a loss).

I know the feeling, it's normal for people to try to see patterns in something, to try to establish causation and correlation but, it's simply not here in this case.

It's the free market pattern in a nutshell. Nothing fancy.

And with 8 hours of peak sun (Germany gets 5 on averge), you need 30 of them for one miner, so ~$3000, then an equivalent of at least 24kwh of battery storage (at least), and all that to make 10$ a day from a $5000 upfront machine, dirt cheap you say?

€1600 for 8 kW sounds dirt cheap to me (China production surplus helps). It's not just for mining, nor did I say anything about going off-the-grid, most people don't care about BTC, but to reduce their electricity bills in general. Mining is a bonus.

I don't mind people investing in renewable energy, as long as it follows the free market principles and not some ESG centralized planning/state subsidies BS.

[FP91G]

When asked if the updated bitcoin production cost estimate of $45,000 implies that JPMorgan expects the bitcoin price to rise to that level, Panigirtzoglou told The Block that while the current bitcoin production cost estimate stands at $45,000, it still maintains the $42,000 level for the medium term.

Why do they keep with this stupid assumption?
Bitcoin is not mining for coal or drilling for oil, you can't cut production, there will still be 450 Bitcoin mined every day, and you can't support the price if something is more expensive to mine, you will just have some miners quit and the ones in profit will keep on mining, mining cost will NEVER influence the price!
If such thing were true then all the community would have to do is invest just 10 billion in gear and voila, the hashrate is doubled, the cost per Bitcoin is doubled do suddenly we're at 90k per coin and we have gained 500 billion in market cap, but things don't work like this!
Price determines the hashrate, not the other way around.

I'm sure the price can't affect hash rate quickly because if you want to buy a large batch of asics from a manufacturer, you will have to wait 3-6 months or more and you will need time to set up the launch of these asics. When bitcoin will already cost closer to 45 thousand and your mining calculator will show you the cost of mining at 42 thousand, then it is not profitable to start mining.

[BlackHatCoiner]

Mining profits have dropped almost ten times since 2021, the price is the same....

I can also show you a diagram of 2018, when the price had crashed while the hashrate was rising. It wouldn't prove that the price does not influence the hashrate, though.

If I would use this to bankrupt the competition, once the competition is done for, and my cost are 1/5 of the mined bitcoin I would just sell 1/5 to cover my expenses, so it would mean the price would go back up again as less coins are released, making me sell even less but at the same time making competition again possible, the wheel keeps turning. In order to drop the new contenders I would have to drop the price again, and then again...

I think I see. When you're done selling bitcoin at <$50,000 to kill the competition, the new buy orders will rise the price back to where it was, because you're only just a seller, once. And once the price rises, it is again profitable to mine outside the Hypothetical-Islands.

But, if you accumulate enough hashrate so that you would mine half the bitcoins everyday, wouldn't that be enough to damage the other businesses? It's difficult to think about it, because there's no good analogy in the real world. For everything in this world, if energy became cheaper, you would have increase in supply, and that is impossible to happen in this case. It's just reallocation of hashrate portions.

[stompix]

Mining profits have dropped almost ten times since 2021, the price is the same....

I can also show you a diagram of 2018, when the price had crashed while the hashrate was rising. It wouldn't prove that the price does not influence the hashrate, though.

[/quote]

The hashrate can't react to price changes that fast, you say the price has crashed but in November it was at 6k and not counting December and January for nearly the rest of the year it was in the same 6k-8k price range, somebody who would have placed their order in May at $2.5k and got their fully functional gear 3 months later would definitely keep on mining, much like the other preorders that sometimes take even 6 months. If gear were as easy to buy as canned goods at Walmart the reactions after a price jump would be far more intense but with these delays in orders, shipping, customers, and installing you will see months of discrepancies.

Also, there is another problem, yeah price is going down, but how much does that mean in terms of earning, if you go down from 60 cents to 30 cents per th/s is not even close to the blow of getting from 10 cents/th to 5 cents. If you drop from 40 to 20, for example, there is a shitload of room for expansion, at the least profitability peak we were at 40 cents, with enough room to grow by a lot now we're almost reaching equilibrium, and whatever growth it is on borrowed money from investors by the big guys.

But, if you accumulate enough hashrate so that you would mine half the bitcoins everyday, wouldn't that be enough to damage the other businesses?

You will damage them by making their share of the pie smaller, so less income per $ of costs, but this will not affect the price, it will be a result of the price.

Higher hashrate = higher difficulty = higher mining cost
Lower hashrate = lower difficulty = lower mining cost

Again, basic mistake that keeps getting repeated on all these blogs!
The cost is the same, if I mine with 10cents per kWh I'm going to have the same mining cost the whole year for my s19, that's 72kwh a day, $7.2 each day, no matter what the hashrate is, it can go up or down the cost for mining is the same, it's the revenue that changes!
1 million ASICs haven't changed their mining cost just because somebody else has bought another 500k of them, it's the revenue that has slid by 1/3.

[FP91G]

Again, basic mistake that keeps getting repeated on all these blogs!
The cost is the same, if I mine with 10cents per kWh I'm going to have the same mining cost the whole year for my s19, that's 72kwh a day, $7.2 each day, no matter what the hashrate is, it can go up or down the cost for mining is the same, it's the revenue that changes!
1 million ASICs haven't changed their mining cost just because somebody else has bought another 500k of them, it's the revenue that has slid by 1/3.

The cost of mining is not measured by the cost of electricity alone. Any miner will still have additional costs over the year, which depend on the equipment and the date of its production. The older the equipment, the more failures and additional repair and setup costs.