$500,000 per Bitcoin, baby. The math behind it.

[CoinDiver]

More importantly, what kind of transaction volume can the protocol currently handle?

[2double0]

Why did you state there are only 12 million, there will be over 20 million in CIRCULATION by 2140.

[CoinDiver]

Why did you state there are only 12 million, there will be over 20 million in CIRCULATION by 2028.

FTFY

[Possum577]

For $5,000 to happen you need ONLY 0.1% acceptance of world population for Bitcoin. We are at 0.01% now.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

The original poster of this was not me. Full credit goes to this guy "domainbrokers". I liked his post so much that I wanted to share it.

Where's the math or logic that makes this statement true?

Price isn't purely based on supply, it has to also be based on demand. And if supply increases and demand doesn't increase with it prices are not going to grow as quickly as you suspect.

I love the sentiment but I don't see any math her to prove your assumptions...it's still just your hunch, guess, hope.

[Anders]

My guess is that Bitcoin may reach $5,000 but not much more than that. And Bitcoin may go down to $500 but not much lower than that. <-- wild guesses  

I think that is considerably less than we will be seeing. If you believe Bitcoin is going to continue on, then it will have to get much higher to accomodate all the people that will be getting in. We have like 0.01% market adoption if that.

C'mon, think big and look at the big picture!

Ok, I'm going to be honest here and claim that Bitcoin is only a pilot project. A very impressive technology being tested as a proof of concept and as a means of gathering statistics. Previously I believed that the NSA may have been the inventor of Bitcoin. Now I have changed my mind. Bitcoin is probably an IBM project or something like that. Deep conspiracy stuff.

And from that perspective Bitcoin was never meant to replace the ordinary fiat currencies. This means that "they" will only allow Bitcoin to go so far, say up to $5,000. I propose that it's a mistake to believe that Bitcoin just happened to be invented as some fluke inspiration of a real person named Satoshi Nakamoto. There are big deliberate powers behind Bitcoin. That's my guess at the moment.

[Possum577]

We cannot/do not want to get to $500,000 per BTC any time soon.  Here is the math behind it:

https://bitcointalk.org/index.php?topic=694401.0

If BTC were to go to $500,00 in this era it would cause a catastrophic mining bubble:

   $500,000 x 25 = $12,500,000 per block = $75,000,000 per hour

   $75 million per hour would drive the mining to attempt to use 675 GW.  This is about 30% of all the power generated on the planet.

So, in order to keep our power consumption under about 2% of world wide power production, we cannot/do not want the price to get to $500,000 before era 6, which is about 2033 or so.

Using my previously derived formula for the power consumption:

P = (6(50/2^e) + f)(x)(1 - g)/c [kW]

where:

x = exchange rate [USD/BTC]
e = era [0..32] (we are currently in era 1)
f = average fees per hour [BTC/hour]
c = cost of energy [USD/kWh]
g = average gross profit margin [unitless ratio]

we can look at the power consumption in each era assuming a price of $500,000 per BTC.

In order to make it simple I will make the following assumptions:

x = $500,000 per BTC
f = fees per hour will keep the coinbase above 6 BTC/hour (1 BTC/block) in all eras
c = $0.10 per kWh
g = 0.1 miner gross profit margin

Code:

     Original target      Subsidy    Est Fees  Power  % of total world
Era    starting year    BTC/block    BTC/hour     GW  power production
---  ---------------  -----------  ----------  -----  ----------------
  0             2009  50.00000000  0.00000000  1,350            58.41%
  1             2013  25.00000000  0.00000000    675            29.20%
  2             2017  12.50000000  0.00000000    337            14.60%
  3             2021   6.25000000  0.00000000    169             7.30%
  4             2025   3.12500000  0.00000000     84             3.65%
  5             2029   1.56250000  0.00000000     42             1.83%
  6             2033   0.78125000  1.31250000     27             1.17%
  7             2037   0.39062500  3.65625000     27             1.17%
  8             2041   0.19531250  4.82812500     27             1.17%
  9             2045   0.09765625  5.41406250     27             1.17%

How does increased prices of BTC per USD increase the amount of power required to mine? The amount of effort required to mine isn't based on price but rather the amount of blocks that have been mined alredy...the price is meaningless.

Or, what am I missing?

Thanks.

[colinistheman]

Why did you state there are only 12 million, there will be over 20 million in CIRCULATION by 2140.

12 million instead of 20 million due to number of lost coins at the end of 20 years is my guess. That, or it was a typo and he meant "21" but typed "12" instead.

[Meuh6879]

Why did you state there are only 12 million, there will be over 20 million in CIRCULATION by 2028.

FTFY

2032 for 99% of bitcoin emit (mined).

[haploid23]

Can Bitcoin hit 10% growth of population?

Credit cards did and they reject 90% of the world.

Bitcoin rejects no one.

So Bitcoin will go in trade where Visa/Mastercard refuse to go.

Yes but however, bitcoin is still for the privileged. A large chunk of the world population is in poverty, barely enough food to survive. They don't even have computers/internet. Technically speaking, bitcoin does not reject anyone, however not everyone will be able to access it. Cash is still king for these people.

[moriartybitcoin]

I think $500k/coin would not happen because if the market grows that big, other altcoins will drain market share.

[Yeezus]

I think $500k/coin would not happen because if the market grows that big, other altcoins will drain market share.

Why would people use other alts? People will only flock to alt coins if you can actually spend them anywhere which is what is currently holding back most alts at the moment. They're just gimmicks without merchants behind them.

[slaveforanunnak1]

The power consumption over the next 50 years is harder to predict than the price.  There are many factors simplified above that could change.

You are correct for acknowledging the many known unknowns and potential unknown unknowns, thus I reject this one comment:

So, in order to keep our power consumption under about 2% of world wide power production, we cannot/do not want the price to get to $500,000 before era 6, which is about 2033 or so.

There definitely are physical restrictions with todays technology on the market cap of bitcoin but all of that can change overnight....
Printable solar cells with ASIC's? ASIC space heaters?

That's exactly what i was thinking! Let bitcoin be the engine behind solar cell technology! those Obama hand-outs didn't do shit! Thanks obama!

[slaveforanunnak1]

We cannot/do not want to get to $500,000 per BTC any time soon.  Here is the math behind it:

https://bitcointalk.org/index.php?topic=694401.0

If BTC were to go to $500,00 in this era it would cause a catastrophic mining bubble:

   $500,000 x 25 = $12,500,000 per block = $75,000,000 per hour

   $75 million per hour would drive the mining to attempt to use 675 GW.  This is about 30% of all the power generated on the planet.

So, in order to keep our power consumption under about 2% of world wide power production, we cannot/do not want the price to get to $500,000 before era 6, which is about 2033 or so.

Using my previously derived formula for the power consumption:

P = (6(50/2^e) + f)(x)(1 - g)/c [kW]

where:

x = exchange rate [USD/BTC]
e = era [0..32] (we are currently in era 1)
f = average fees per hour [BTC/hour]
c = cost of energy [USD/kWh]
g = average gross profit margin [unitless ratio]

we can look at the power consumption in each era assuming a price of $500,000 per BTC.

In order to make it simple I will make the following assumptions:

x = $500,000 per BTC
f = fees per hour will keep the coinbase above 6 BTC/hour (1 BTC/block) in all eras
c = $0.10 per kWh
g = 0.1 miner gross profit margin

Code:

     Original target      Subsidy    Est Fees  Power  % of total world
Era    starting year    BTC/block    BTC/hour     GW  power production
---  ---------------  -----------  ----------  -----  ----------------
  0             2009  50.00000000  0.00000000  1,350            58.41%
  1             2013  25.00000000  0.00000000    675            29.20%
  2             2017  12.50000000  0.00000000    337            14.60%
  3             2021   6.25000000  0.00000000    169             7.30%
  4             2025   3.12500000  0.00000000     84             3.65%
  5             2029   1.56250000  0.00000000     42             1.83%
  6             2033   0.78125000  1.31250000     27             1.17%
  7             2037   0.39062500  3.65625000     27             1.17%
  8             2041   0.19531250  4.82812500     27             1.17%
  9             2045   0.09765625  5.41406250     27             1.17%

How does increased prices of BTC per USD increase the amount of power required to mine? The amount of effort required to mine isn't based on price but rather the amount of blocks that have been mined alredy...the price is meaningless.

Or, what am I missing?

Thanks.

I think what he is saying is this:

currently each btc is about 600 bucks! Thats the reason I'm about to stop mining. I think i've reached my ROI for my miners and at this price they are just wasting power. Might as well just buy the BTCs.
however, if the BTC was fucking half a mil, guess what?? i'll be starting my miners back up again, and so will everyone and their moms. Then the total power used to mine btc will reach astronomic amounts. Unless, we can use solar cells, or some other form of reusable energy + ASICs to mine.

[BurtW]

There definitely are physical restrictions with todays technology on the market cap of bitcoin but all of that can change overnight....
Printable solar cells with ASIC's? ASIC space heaters?

You seem to think that technology and/or efficiency figure in to the system power consumption formula.  They do not.  It does not matter how efficient the miners become, it does not matter if the ASICs get smaller/better/faster/cheaper.  Most importantly it does not matter where you get the power from, assuming the same cost.

If you are assuming that printable solar cells are going to bring the average cost of power down under my $0.10 per KWh estimate then that would allow the Bitcoin network to use even more power than the estimate given.

If you think that miners can find a profitable use for the waste heat from the mining process then that would allow them to use even more power than the estimates given.

By design the amount of power consumed is directly propotional to the average amount of USD available per block (subsidy + fees) as show in the formula given above.

Within an era the power consumed is proportional to the price.  If the price goes from $500/BTC to a sustained $5,000 per BTC the amount of power consumed by the network will rise to about 10x the former amount independent of efficiency and technology used.

[BurtW]

We cannot/do not want to get to $500,000 per BTC any time soon.  Here is the math behind it:

https://bitcointalk.org/index.php?topic=694401.0

If BTC were to go to $500,00 in this era it would cause a catastrophic mining bubble:

   $500,000 x 25 = $12,500,000 per block = $75,000,000 per hour

   $75 million per hour would drive the mining to attempt to use 675 GW.  This is about 30% of all the power generated on the planet.

So, in order to keep our power consumption under about 2% of world wide power production, we cannot/do not want the price to get to $500,000 before era 6, which is about 2033 or so.

Using my previously derived formula for the power consumption:

P = (6(50/2^e) + f)(x)(1 - g)/c [kW]

where:

x = exchange rate [USD/BTC]
e = era [0..32] (we are currently in era 1)
f = average fees per hour [BTC/hour]
c = cost of energy [USD/kWh]
g = average gross profit margin [unitless ratio]

we can look at the power consumption in each era assuming a price of $500,000 per BTC.

In order to make it simple I will make the following assumptions:

x = $500,000 per BTC
f = fees per hour will keep the coinbase above 6 BTC/hour (1 BTC/block) in all eras
c = $0.10 per kWh
g = 0.1 miner gross profit margin

Code:

     Original target      Subsidy    Est Fees  Power  % of total world
Era    starting year    BTC/block    BTC/hour     GW  power production
---  ---------------  -----------  ----------  -----  ----------------
  0             2009  50.00000000  0.00000000  1,350            58.41%
  1             2013  25.00000000  0.00000000    675            29.20%
  2             2017  12.50000000  0.00000000    337            14.60%
  3             2021   6.25000000  0.00000000    169             7.30%
  4             2025   3.12500000  0.00000000     84             3.65%
  5             2029   1.56250000  0.00000000     42             1.83%
  6             2033   0.78125000  1.31250000     27             1.17%
  7             2037   0.39062500  3.65625000     27             1.17%
  8             2041   0.19531250  4.82812500     27             1.17%
  9             2045   0.09765625  5.41406250     27             1.17%

How does increased prices of BTC per USD increase the amount of power required to mine? The amount of effort required to mine isn't based on price but rather the amount of blocks that have been mined alredy...the price is meaningless.

Or, what am I missing?

Thanks.

I think what he is saying is this:

currently each btc is about 600 bucks! Thats the reason I'm about to stop mining. I think i've reached my ROI for my miners and at this price they are just wasting power. Might as well just buy the BTCs.
however, if the BTC was fucking half a mil, guess what?? i'll be starting my miners back up again, and so will everyone and their moms. Then the total power used to mine btc will reach astronomic amounts. Unless, we can use solar cells, or some other form of reusable energy + ASICs to mine.

Correct, except the source of the power does not matter unless it is more expensive (network will use less of it) or less expensive (network will just use more of it).  Also better ASICs do not matter because people will just buy more of them.

Details here:  https://bitcointalk.org/index.php?topic=694401.0

[johnyj]

There is a central authority forcing people to use fiat money, giving them to people as salary, and the economy behind it grows (Not the other way round: the economy grows and need more fiat money. you always first get money and then setup project to hire people). If they stop giving out fiat money, the economy will shrink

For bitcoin it is very different, if no central authority is giving out bitcoin as salary, there will be very limited bitcoin spending, thus the bitcoin economy won't grow quickly

You can't take the size of a fiat money economy and apply it to bitcoin. The bitcoin economy only grows at remittance and long term saving area

[BurtW]

There is a central authority forcing people to use fiat money, giving them to people as salary, and the economy behind it grows (Not the other way round: the economy grows and need more fiat money. you always first get money and then setup project to hire people). If they stop giving out fiat money, the economy will shrink

For bitcoin it is very different, if no central authority is giving out bitcoin as salary, there will be very limited bitcoin spending, thus the bitcoin economy won't grow quickly

You can't take the size of a fiat money economy and apply it to bitcoin. The bitcoin economy only grows at remittance and long term saving area

Agree!

The way I look at it is that inflationary fiat is designed to be spent, it punishes savers and pumps up the consumer driven consumption oriented economy we currently have.  People have very little incentive to keep it so they spend it on a whim on anything or everything they think they want.

Bitcoin is the opposite of government/central bank issued fiat currency in every way.  For the purposes here the difference it that it rewards and encourages saving.  People have every incentive to save BTC and will only spend it on things they must have, things they need.

If everyone spent only on what they needed as opposed to what they wanted everything on this planet would change.  Everything.

[beetcoin]

There is a central authority forcing people to use fiat money, giving them to people as salary, and the economy behind it grows (Not the other way round: the economy grows and need more fiat money. you always first get money and then setup project to hire people). If they stop giving out fiat money, the economy will shrink

For bitcoin it is very different, if no central authority is giving out bitcoin as salary, there will be very limited bitcoin spending, thus the bitcoin economy won't grow quickly

You can't take the size of a fiat money economy and apply it to bitcoin. The bitcoin economy only grows at remittance and long term saving area

btw, did you hear about overstock paying their employees in bitcoin? well, not salary but bonuses. i can see other companies like dell or newegg following suit.

[taylortyler]

This post made me smile and feel all warm and fuzzy inside. And 2033 is fine with me for $500,000 a piece

And the great thing about the decentralized cryptocurrency revolution is that it  will spark a fee additional revolutions by itself....all of which will involve removing the power from the ruling elite and putting it back into the hands of the people.

[gelar24]

It's still speculation / wishful thinking at the end of the day. 1% is a bigger number than you might think so $5000 is quite a while away if it ever comes/

yes actually it is still speculation, so hopefully correct at least $ 5,000 or $ 1,000 that was enough

I have had also the end of each year definitely improved, I reflect on the year previous year