How can the real value of Bitcoin be accurately determined?

[Alpen]

Cost of mining is the most idiotic indicator, and it's a fierce competition for the top place in a world of stupid indicators!

The cost of mining a Bitcoin is influenced by the price which makes it useless, does Bitcoin goes up, more miners join, you need to add more hash and more electricity consumption to make the same revenue. does BTC price go down, low-income miners go bankrupt, resilient miners keep mining they spend less kwh to mine the same thing..

Bitcoin is not oil or coal, where it doesn't matter if a ton of coal is $100 or $50, you pay the same truck the same excavator, the same wage to mine a bucket of it, no matter the price, it's absolutely useless to discuss the "cost of mining a bitcoin"!
Head over to the mining section and you will get the same answers, the cost of mining a full Bitcoin is influenced by the price, not the other way around.
If that had been possible, all we would have had to do is buy 100x times more ASICs and voila, the cost is 100x so the value goes 100x!

If the cost of oil production is irrelevant, then why did the shale drillers go bankrupt?

[Alpen]

To determine the price of BTC, it doesn't matter if you're alive in 100 years or not. The price will be determined by the supply, which, as we know, is limited, and the demand, which by that time may be either large or non-existent.

If the price of Bitcoin is determined by supply, then why does it drop by exactly the same amount as the drop in hash rate? Why does Bitcoin NEVER set a new all-time high unless the hash rate first sets a new all-time high?

[tvplus006]

To determine the price of BTC, it doesn't matter if you're alive in 100 years or not. The price will be determined by the supply, which, as we know, is limited, and the demand, which by that time may be either large or non-existent.

If the price of Bitcoin is determined by supply, then why does it drop by exactly the same amount as the drop in hash rate? Why does Bitcoin NEVER set a new all-time high unless the hash rate first sets a new all-time high?

You got it all mixed up)) This hashrate drops when the price of bitcoin declines, as miners disable their ASIC. Conversely, when the price of bitcoin increases, mining becomes economically more profitable, which forces miners to turn on their ASICs again, which were disabled when the price of BTC decreased, and this leads to an increase in the hashrate.

[Alpen]

You got it all mixed up)) This hashrate drops when the price of bitcoin declines, as miners disable their ASIC. Conversely, when the price of bitcoin increases, mining becomes economically more profitable, which forces miners to turn on their ASICs again, which were disabled when the price of BTC decreased, and this leads to an increase in the hashrate.

If you truly believe that, then you have NEVER actually looked at the Bitcoin price and the hash rate on the same chart.

[tvplus006]

You got it all mixed up)) This hashrate drops when the price of bitcoin declines, as miners disable their ASIC. Conversely, when the price of bitcoin increases, mining becomes economically more profitable, which forces miners to turn on their ASICs again, which were disabled when the price of BTC decreased, and this leads to an increase in the hashrate.

If you truly believe that, then you have NEVER actually looked at the Bitcoin price and the hash rate on the same chart.

So take a look at the charts, where you can see very clearly that the price is rising first, and then the hashrate is increasing because more and more miners are connecting their ASICs. The hashrate increases or decreases with a delay, and if a dump occurs and then the price recovers, the hashrate will not have time to react to such a price change.

[MusaMohamed]

So take a look at the charts, where you can see very clearly that the price is rising first, and then the hashrate is increasing because more and more miners are connecting their ASICs. The hashrate increases or decreases with a delay, and if a dump occurs and then the price recovers, the hashrate will not have time to react to such a price change.

Mining cost can be used to find Bitcoin value but it is only for estimation of Bitcoin value. As same as with any other things, we never are able to find absolutely accurate value of anything. There are always many factors existing that we don't know yet and can not count them into our value estimation. Therefore, estimations are estimations with big or small inaccuracy.

Bitcoin mining cost can be used for Bitcoin value estimation but the actual value is bigger than the cost of mining one bitcoin.
A deep dive into costs and rewards of Bitcoin mining.

[Hamza2424]

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?

First of all, are you using this platform still! Like it was fined with a huge fine for being a portal for money laundering and as far as I know the money was used for child se@ual abuse material and ransomware, I read about it online just now and I don't think any of us should be using it. Just a personal opinion like my 2 sat you can't have.

Now I don't think it will hit $60k this year, but maybe it will hit $60k in the bear cycle which is a typical point it can hit because it was the previous all time high so now it can hit it again nothing to worry about. I might start buying at this point as I am doing now haha. But bro what your strategies are saying, can it hit $25k again!

[Alpen]

First of all, are you using this platform still! Like it was fined with a huge fine for being a portal for money laundering and as far as I know the money was used for child se@ual abuse material and ransomware, I read about it online just now and I don't think any of us should be using it. Just a personal opinion like my 2 sat you can't have.

Now I don't think it will hit $60k this year, but maybe it will hit $60k in the bear cycle which is a typical point it can hit because it was the previous all time high so now it can hit it again nothing to worry about. I might start buying at this point as I am doing now haha. But bro what your strategies are saying, can it hit $25k again!

You're being contradictory. You scream that governments and regulators shouldn't mess with crypto anonymity, but then you bring up fines as a sign of platform distrust.

Let's get to the core of the issue: the company was accused of failing to identify a fraction of millions of client transactions. Is that truly comparable to the allegations against FTX or Binance? Those exchanges outright used customer money without permission for their own purposes, and their leaders got jail time.

The Cryptomus case was an administrative fine applied to a brand partner. They offer White Label services; you could even start your own exchange or crypto gateway using their brand.

[lornadane]

Interesting that you still track mining cost as a baseline. Do you see it more as a worst-case scenario or a buy zone? I’ve always wondered if that metric becomes less relevant as fees, halvings, and institutional demand play a bigger role than pure block rewards.

[Alpen]

Interesting that you still track mining cost as a baseline. Do you see it more as a worst-case scenario or a buy zone? I’ve always wondered if that metric becomes less relevant as fees, halvings, and institutional demand play a bigger role than pure block rewards.

Mining cost remains an absolute buy zone for me. I’ll hit the 'BUY' button the moment we reach those levels. As for institutional interest, it’s actually driven by the hash rate. The security of their investments depends directly on the amount of computing power securing the BTC network.

[pliego]

From past cycles, mining cost works better in bear markets as a buy zone, in bulls it gets left behind fast hahaha

[shinratensei_]

Interesting that you still track mining cost as a baseline. Do you see it more as a worst-case scenario or a buy zone? I’ve always wondered if that metric becomes less relevant as fees, halvings, and institutional demand play a bigger role than pure block rewards.

Mining cost is still a good indicator for baseline though. If the miners are unprofitable it will either be less efficient miners exiting or the price goes up to adjust with the cost of mining bitcoin.
If we follow the halving, bitcoin's price should be going up double every halving along with the increased sense of scarcity. It's what the price should be when there's no premium.

[Faisal2202]

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.

You are right every cycle brought something new, and this cycle was full of surprises as before btc hit new all time high after the halving but this time it made new all time high before the halving due to the hype of ETFs approval, and so far I think this bull run is also the longest due to the trump win otherwise maybe we would already be in bear run if he would not have won the election.

Now the mining theory is great but right now the amount is around exactly? (I googled it is around $55k) but it varies from place to place. I think it will dump more but let's see. 

[pawanjain]

I have staked my available BTC coins on the Cryptomus exchange for the duration of the crypto winter.

What is your strategy?

I like your post very much until in the end you spoke about staking your BTC.
Staking bitcoin on exchange is like giving your money to someone else to grow.
What's the guarantee that person won't run away with your money ?
Never trust exchanges with your money and stop staking your coins on exchanges.

[aysha9853]

I see mining cost more like a reference than real value. It helps to spot when price is stretched but it is not something price has to respect. In deep bear markets BTC can trade below it for months. For me value comes from adoption and time not indicators.

[tvplus006]

To determine the price of BTC, it doesn't matter if you're alive in 100 years or not. The price will be determined by the supply, which, as we know, is limited, and the demand, which by that time may be either large or non-existent.

If the price of Bitcoin is determined by supply, then why does it drop by exactly the same amount as the drop in hash rate? Why does Bitcoin NEVER set a new all-time high unless the hash rate first sets a new all-time high?

You got it all mixed up)) This hashrate drops when the price of bitcoin declines, as miners disable their ASIC. Conversely, when the price of bitcoin increases, mining becomes economically more profitable, which forces miners to turn on their ASICs again, which were disabled when the price of BTC decreased, and this leads to an increase in the hashrate.

"Bitcoin has often surged after sustained hashrate drops, a trend that would provide much-needed relief to many struggling Bitcoin miners at current prices" - https://cointelegraph.com/news/bitcoin-mining-woes-may-signal-bullish-price-action The trend is optimistic for Bitcoin and miners, as rising prices could widen profitability margins for some or result in turning previously unprofitable miners back online.

[SilverCryptoBullet]

"Bitcoin has often surged after sustained hashrate drops, a trend that would provide much-needed relief to many struggling Bitcoin miners at current prices" - https://cointelegraph.com/news/bitcoin-mining-woes-may-signal-bullish-price-action The trend is optimistic for Bitcoin and miners, as rising prices could widen profitability margins for some or result in turning previously unprofitable miners back online.

There is no need to make any relief for Bitcoin miners as things go naturally and in Bitcoin mining history, there are many times of Bitcoin miner capitulations. Weak miners have to capitulate from this industry and strong miners from financial budgets to better long term strategies will take over pieces of ASICs sold out from weak miners, then dominate the mining industry with bigger hashrates.

Thinking the market needs to move up as weak miners need a short term relief is unrealistic. The game and the party belong to strongest participants in mining industry to strongest instutional investors and market makers in the market, it is not here for weak participants to survive and get profit easily.

[JeffBrad12]

idk why people still think mining costs act as a floor for the price, it has been proven time and again that price drives hash rate and not the other way around, if the price drops the difficulty just adjusts eventually and the strong survive, it is a self-regulating system that doesn't care about your feelings or your electricity bill lol

Hashrate adjustment is true and may correlate to volatility but each bitcoin mined have its cost so it's not like a bitcoin is mined out of thin air without cost. So even if hashrate adjust due to low profitability, it's still not wrong to say that the cost to produce bitcoin can be a base floor price.
Doesn't mean the price gonna follow it though since bitcoin is all about supply and demand. It's just a good information to have but not the nail on the coffin. At least people know the value is derived from somewhere else.

[jaberwock]

I am sure that no market could value an asset accurately, we have assets as high or low valued one or fairly valued. When there cannot be any measurement for estimating the demand at any point of time, how we could assume that market will be able to adjust the price accordingly. The supply of bitcoin is also approximate only because no one could foretell when a whale decides to cashout, it means, with respect to market's perspective, both supply and demand are approximate and based on this we do get an approximate price at any point of time. +/-2% approximation is more common and usually both traders and investors will not mind this.

Role of mining has power in determining the price of bitcoin is also very limited. Hash power of bitcoin network does impact the bitcoin market prices but not up to the level of accurately determining. In my opinion, no market gets us accurate price for any asset.

[M47AK16]

I see mining cost more like a reference than real value. It helps to spot when price is stretched but it is not something price has to respect. In deep bear markets BTC can trade below it for months. For me value comes from adoption and time not indicators.

This is true, it is not really something that gives bitcoin an instinct value type of deal just because it's a "cost" to make one, because that changes all the time and if we want to lower the price then we can lower the cost because we can lower the demand and usage of it as well. This is why it's dynamic and changes all the time, and majority of the bitcoin that we have in the world already got created back when it was lower, so not like it really matters what the cost is today at all.