How can the real value of Bitcoin be accurately determined?

[Alpen]

During Satoshi Nakamoto's final days on this forum, the topic of Bitcoin's true value was discussed. I don't remember exactly who suggested equating it to the cost of mining, but this figure has always served as the final price limit from which a long-term upward trend has begun since then.

How can you find out the cost of mining 1 BTC? I use an indicator from Trading View which is based on analysts' and Cambridge's calculations. As you can see from the screenshot, Bitcoin could fall to $59,857, which would represent a loss of 75% of its value from the market high.



It's hard to hear that, isn't it? But in previous crypto winters, losses have been greater than 80%. I was prepared for such a scenario, however, and I have the funds to average out my position, which I will start doing gradually below $80k. I have staked my available BTC coins on the Cryptomus exchange for the duration of the crypto winter.

What is your strategy?

[cryptoaddictchie]

During Satoshi Nakamoto's final days on this forum, the topic of Bitcoin's true value was discussed. I don't remember exactly who suggested equating it to the cost of mining, but this figure has always served as the final price limit from which a long-term upward trend has begun since then.

How can you find out the cost of mining 1 BTC? I use an indicator from Trading View which is based on analysts' and Cambridge's calculations. As you can see from the screenshot, Bitcoin could fall to $59,857, which would represent a loss of 75% of its value from the market high.



It's hard to hear that, isn't it? But in previous crypto winters, losses have been greater than 80%. I was prepared for such a scenario, however, and I have the funds to average out my position, which I will start doing gradually below $80k. I have staked my available BTC coins on the Cryptomus exchange for the duration of the crypto winter.

What is your strategy?

Good breakdown on mining cost has always acted like a long-term floor for Bitcoin, even if price dips below it during heavy fear. My strategy is quite simple. I don’t try to catch the exact bottom and I just scale in slowly as the market gets cheaper. Bitcoin mining isn't advisable for now I think as due to expenses but holding and buying would do good instead and that’s already strong value for long term holders when price average smoothly and healthy. Staking BTC? Be careful on that, it's a Pow so this staking isn't actually staking for bitcoin.

[rat03gopoh]

I don't remember exactly who suggested equating it to the cost of mining, but this figure has always served as the final price limit from which a long-term upward trend has begun since then.

This is what they call the premium price taken when Bitcoin was first publicly traded on the New Liberty Standard. It might have made sense in Satoshi's time, as miners only needed to draw energy from household electricity. The problem is, calculations become more complex as mining difficulty increases. Mining costs are no longer the same for all miners, depending on electricity, efficiency, machine amortization, scale, and financing strategy.

Averaging a position below $80,000 isn't a bad idea as long as you understand the risks, but don't use mining costs as the premium price; that's an assumption I don't think is a key factor lately.

[hugeblack]

There is no fixed rule. In each cycle something new happens. For example, in the previous cycle, the low exceeded the ATH of the previous cycle, which is something that had never happened before. Therefore, there is a good probability that the low of the current cycle will be less than the cost of mining one Bitcoin.

[Lida93]

It's hard to hear that, isn't it? But in previous crypto winters, losses have been greater than 80%. I was prepared for such a scenario, however, and I have the funds to average out my position, which I will start doing gradually below $80k. I have staked my available BTC coins on the Cryptomus exchange for the duration of the crypto winter.

Bitcoin has an unpredictable volatile history, so am not amazed on learning of this speculative information about what could possibly happen with bitcoin price falling below $60k. It could perhaps got much deeper with price should global crisis and other economic factors worsening in the years by. I could remember vividly how bitcoin once went dip-ish to $16k after an ATH of $72k+ in a previous circle, that was 77.7% loss for holders at that time, and now with a $126k ATH. Regardless of what the price decline might fall to, am just in thoughts what the next 4 years from now will make of bitcoin price facing another bull season.

[OcTradism]

There is no fixed rule. In each cycle something new happens. For example, in the previous cycle, the low exceeded the ATH of the previous cycle, which is something that had never happened before. Therefore, there is a good probability that the low of the current cycle will be less than the cost of mining one Bitcoin.

Bitcoin value changes with time from the blockchain network hashrate to adoption globally. Every changes around the world all contribute to Bitcoin value growth over time and it is continously with time, so the value of Bitcoin is only estimatable, not calculatable exactly.

From value, it will result in price on the market and we see in different nations, Bitcoin prices are exchanged among locals differrently too. Value and price are related with each other and price can be over or under true value of Bitcoin while as said, we can not identify the absolute value of Bitcoin at any time.

I recommend this chart to use https://www.bitcoinmagazinepro.com/charts/realized-price/

[hugeblack]

I recommend this chart to use https://www.bitcoinmagazinepro.com/charts/realized-price/

According to the chart^[1], the Bitcoin Realized Price is the average purchase price of all bitcoins in circulation and cannot be considered the true price of Bitcoin, as the price has sometimes been lower and sometimes higher than that price, and therefore it cannot be considered a measure of the bottom.

[1] https://www.bitcoinmagazinepro.com/charts/realized-price/

[Alpen]

This is what they call the premium price taken when Bitcoin was first publicly traded on the New Liberty Standard. It might have made sense in Satoshi's time, as miners only needed to draw energy from household electricity. The problem is, calculations become more complex as mining difficulty increases. Mining costs are no longer the same for all miners, depending on electricity, efficiency, machine amortization, scale, and financing strategy.

Averaging a position below $80,000 isn't a bad idea as long as you understand the risks, but don't use mining costs as the premium price; that's an assumption I don't think is a key factor lately.

The indicator factors in the varying cost of mining Bitcoin, which is why its 'red zone' is so wide. Essentially, you can gradually start accumulating BTC even right now

[Alpen]

There is no fixed rule. In each cycle something new happens. For example, in the previous cycle, the low exceeded the ATH of the previous cycle, which is something that had never happened before. Therefore, there is a good probability that the low of the current cycle will be less than the cost of mining one Bitcoin.

In absolutely every single cycle, the price of Bitcoin has dropped exactly to the mining cost level, and only then does it start a full rally. Personally, I bought BTC the last time when it was sitting around the $15K mark

[tvplus006]

...I don't remember exactly who suggested equating it to the cost of mining, but this figure has always served as the final price limit from which a long-term upward trend has begun since then.

Of course, the cost of mining is the starting point for determining the price of bitcoin, but... But in my opinion, the cost of bitcoin is equal to the price for which market participants are willing to sell and buy it.

[Charles-Tim]

What is your strategy?

From what I am getting here, I think bitcoin can still get to $60000 but I am not sure if we are get in bear market.

It's hard to hear that, isn't it? But in previous crypto winters, losses have been greater than 80%. I was prepared for such a scenario, however, and I have the funds to average out my position, which I will start doing gradually below $80k. I have staked my available BTC coins on the Cryptomus exchange for the duration of the crypto winter.

What is your strategy?

Staking coins on exchanges is not advisable for me because I will prefer to hold the coins by myself on a noncustodial wallet. I will prefer to just nit to stake instead.

[Cryptohygenic]

...I don't remember exactly who suggested equating it to the cost of mining, but this figure has always served as the final price limit from which a long-term upward trend has begun since then.

Of course, the cost of mining is the starting point for determining the price of bitcoin, but... But in my opinion, the cost of bitcoin is equal to the price for which market participants are willing to sell and buy it.

I can afford to say thank you for sharing this. I read the Op and had really been imagining if it was ever recorded that a bitcoin would have a particular rate newly mined bitcoin will begin to trade as a virgin bitcoin. Of course I doubt if there is a historical data that can back this claim up.
Like said, a virgin bitcoin will always be sold at it own market price while change maybe constant due to the customized market volatility.

[Alpen]

Of course, the cost of mining is the starting point for determining the price of bitcoin, but... But in my opinion, the cost of bitcoin is equal to the price for which market participants are willing to sell and buy it.

Like said, a virgin bitcoin will always be sold at it own market price while change maybe constant due to the customized market volatility.

Every asset has a fair value that the market always reverts to after the euphoria of overbuying or a bubble.

For Bitcoin, that fair value is the cost of mining.

[rat03gopoh]

The indicator factors in the varying cost of mining Bitcoin, which is why its 'red zone' is so wide. Essentially, you can gradually start accumulating BTC even right now

I don't think the red zone reflects variations in mining costs, as there was a brutal base price increase in mid-2024, from under ~$30k to ~$59k. I couldn't find any relevant mining news during that period to explain why. Links to charts would be helpful.

[bigimann]

The indicator factors in the varying cost of mining Bitcoin, which is why its 'red zone' is so wide. Essentially, you can gradually start accumulating BTC even right now

I don't think the red zone reflects variations in mining costs, as there was a brutal base price increase in mid-2024, from under ~$30k to ~$59k. I couldn't find any relevant mining news during that period to explain why. Links to charts would be helpful.

You both make good points, and I think this shows why finding the “real value” of Bitcoin is not as straightforward as looking at one indicator. Mining cost is definitely one part of the story, because as difficulty changes, the break-even price for miners changes too. But you’re right that the BIG JUMP IN MID-2024 CAN’T BE FULLY EXPLAINED BY MINING ALONE.

[tvplus006]

For Bitcoin, that fair value is the cost of mining.

And what price will bitcoin have, according to your calculation methodology, when the last bitcoin will be mined and, accordingly, it will be impossible to calculate the cost of bitcoin mining. What method will then be used to calculate the price of BTC?

[tbct_mt2]

You both make good points, and I think this shows why finding the “real value” of Bitcoin is not as straightforward as looking at one indicator. Mining cost is definitely one part of the story, because as difficulty changes, the break-even price for miners changes too. But you’re right that the BIG JUMP IN MID-2024 CAN’T BE FULLY EXPLAINED BY MINING ALONE.

You don't have to fall to headache challenge for finding real value of Bitcoin. It is hard to find the answer for Bitcoin value and you have to know that Bitcoin value changes with time continously from Bitcoin mining hashrate, input cost for mining, Bitcoin adoption, and more. So it's more wisely if you don't chase for answer for a thing that continuously changes with time.

Otherwise, you can simply focus on Bitcoin fundamentals, understand about them, and see Bitcoin potentiality to grow up more from adoption, value then price. It's enough for building up your knowledge about Bitcoin, your belief in it, and trigger you to invest your money in Bitcoin.

This book can help you and other newbies exploring Bitcoin fundamentals.
The bullish case for Bitcoin.

[slaman29]

How do you accurately determine the real value of anything? Gold. Dollar. Stocks.

At least for Bitcoin it was quite easy in the start (like you said, they just made it the cost of mining). I'm reading recently that miner profit is at 5 year low. And the last time that happened, was the end of a bear period. So completely different now as this seems to be the end of bull period.

My strategy? Same in all market conditions. Buy a bit as often as I can.

[bettercrypto]

What is your strategy?

From what I am getting here, I think bitcoin can still get to $60000 but I am not sure if we are get in bear market.

It's hard to hear that, isn't it? But in previous crypto winters, losses have been greater than 80%. I was prepared for such a scenario, however, and I have the funds to average out my position, which I will start doing gradually below $80k. I have staked my available BTC coins on the Cryptomus exchange for the duration of the crypto winter.

What is your strategy?

Staking coins on exchanges is not advisable for me because I will prefer to hold the coins by myself on a noncustodial wallet. I will prefer to just nit to stake instead.

What you are saying is possible if it is confirmed that we are already in a bear market, but the majority still believes that the bull run is not yet over. On my part, it looks like Bitcoin's price value still has a little room to increase.

Although, this is just my assessment. Besides, we all have our own perspectives on how to read the graph chart regarding Bitcoin's price right now,
especially since many are still trying to figure these things out.

[MusaMohamed]

What you are saying is possible if it is confirmed that we are already in a bear market, but the majority still believes that the bull run is not yet over. On my part, it looks like Bitcoin's price value still has a little room to increase.

When you are clearly with market confirmation of a bear market, you have been already in a bear market for a while some months.

You are confusing between value and price.
Value and price are different, value is more important than price even sometimes price can be higher than value. If Bitcoin does not have good value, its price will fall to zero with time, but in fact Bitcoin price has been growing exponentially and solidly since 2009. It's because of Bitcoin value that is good and has never stopped increasing over time.