Cost of production linked to the price?

[hamiltino]

So some people claim that coins are worthless if the cost of production is near zero. Other people claim that it doesn't matter what the cost to producing a coin is as there are other factors that determine the price.

What are your opinions?

[allthingsluxury]

People are willing to pay money, therefore they are worth money.

[hamiltino]

People are willing to pay money, therefore they are worth money.

Yeah i guess its just people trying to pump and convince people that bitcoin is superior to the rest. (specifically POS, dpos currencies)

Demand determines production cost when we are talking bitcoin.

[malaimult]

cost of production is irrelevant imo, it is the value that the people put into bitcoin or crypto that matters. value is determined by the people who use and accept it, not by how much it cost to generate the currency into existence

[btcrich]

Of course there is a cost to producing (mining) Bitcoin.  I read an article a month or two back when the price was hovering around $480 that calculated the actual cost of producing one Bitcoin at $480.  The calculation took into consideration the cost of energy and the depreciation of hardware.

It seems that either there are some miners out there that have since lowered their costs significantly, or people are selling at a loss.

In reality there definitely are other factors though and not only miners control the price.

[franky1]

if it costs you $350 in electric to make a bitcoin you are seriously stupid to sell for $200... you might aswell not mine and be $150 better off..

the thing is that while smart miners are trading privately behind the scenes for cost prices, alot of them have given up even caring about public exchanges and thus the trade volume of public exchanges has dropped 90% since last year.

but stupid, noobs and sheeple still think that public exchanges that now only play with bots and day traders of small dust amounts, being the valuer of bitcoin.

this is not the case, the crappy public exchanges are dying and should not be the indicator of true value.. public exchanges are just the stirring caldron of the day traders, stirring coins in circles and pretending the exchange value has true 'supply/demand' value.

anyone with just 200 coins can tank or pump a public exchange and send the entire market cap from $4billion either to $3billion or upto $5billion.

once people ignore public exchanges to value their coins and instead only sell coins based on their personal costs of mining or buying.. then the sheeple will become whales

[hamiltino]

if it costs you $350 in electric to make a bitcoin you are seriously stupid to sell for $200... you might aswell not mine and be $150 better off..

the thing is that while smart miners are trading privately behind the scenes for cost prices, alot of them have given up even caring about public exchanges and thus the trade volume of public exchanges has dropped 90% since last year.

but stupid, noobs and sheeple still think that public exchanges that now only play with bots and day traders of small dust amounts, being the valuer of bitcoin.

this is not the case, the crappy public exchanges are dying and should not be the indicator of true value.. public exchanges are just the stirring caldron of the day traders, stirring coins in circles and pretending the exchange value has true 'supply/demand' value.

anyone with just 200 coins can tank or pump a public exchange and send the entire market cap from $4billion either to $3billion or upto $5billion.

once people ignore public exchanges to value their coins and instead only sell coins based on their personal costs of mining or buying.. then the sheeple will become whales

I reckon the best way to determine the current price of bitcoin is to see how much it costs to produce 1 bitcoin at any given time. Not to say that the cost of production determines the price, its more of an indicator of what people are willing to pay at that time.

I agree, there is manipulation on most bitcoin exchanges because its just so easy to do.

[James222]

I think it does and here's why: If you can make a bitcoin for 1$, why would you buy one for 300$? It does influence the price, but it's not the only factor determining it's price.

[odolvlobo]

So some people claim that coins are worthless if the cost of production is near zero. Other people claim that it doesn't matter what the cost to producing a coin is as there are other factors that determine the price.

What are your opinions?

The myth lives on.

Consider Proof-of-Stake coins. The cost of production of Proof-of-Stake coins is 0, yet they are not worthless.

It is actually the other way around. The cost of production depends of the value of the coins produced because of the way the difficulty works.

if it costs you $350 in electric to make a bitcoin you are seriously stupid to sell for $200... you might aswell not mine and be $150 better off..

More accurately, if a bitcoin sells for $200, then it is seriously stupid to pay $350 to mine it.

[jbreher]

anyone with just 200 coins can tank or pump a public exchange and send the entire market cap from $4billion either to $3billion or upto $5billion.

This seems implausible. You're taking +/- ~25%. How is it that bearwhale's 30,000 weren't able to achieve a movement of this magnitude?

[LeChatNoir]

I think bitcoiners seriously need an economic crash course

[Beliathon]

anyone with just 200 coins can tank or pump a public exchange and send the entire market cap from $4billion either to $3billion or upto $5billion.

This seems implausible. You're taking +/- ~25%. How is it that bearwhale's 30,000 weren't able to achieve a movement of this magnitude?

~4,000 coins being mined every day, so it's only 9 days worth of coins you're talking about. Relative to the over ~1,500 days bitcoin has existed.

[franky1]

anyone with just 200 coins can tank or pump a public exchange and send the entire market cap from $4billion either to $3billion or upto $5billion.

This seems implausible. You're taking +/- ~25%. How is it that bearwhale's 30,000 weren't able to achieve a movement of this magnitude?

i have seen a few dumps over the last couple  months that involved only a couple hundred coin volume to drop the price $75-$100.. these dumps were not the cause of thousands or millions of coins, but just a couple hundred

[resya]

I think it does and here's why: If you can make a bitcoin for 1$, why would you buy one for 300$? It does influence the price, but it's not the only factor determining it's price.

Good point, I was kicking around the idea that btc was base pricing itself to the aggregate cost of mining, and now someone else confirms my suspicion..thanks.

[odolvlobo]

I think it does and here's why: If you can make a bitcoin for 1$, why would you buy one for 300$? It does influence the price, but it's not the only factor determining it's price.

Good point, I was kicking around the idea that btc was base pricing itself to the aggregate cost of mining, and now someone else confirms my suspicion..thanks.

Sorry. It is not a good point, because it assumes that the entire demand for bitcoins could be satisfied by mining. In fact, the number of bitcoins obtained by mining would not change, so the number of bitcoins traded on exchanges would not change.

For example, let's suppose that 1000 people want 1 bitcoin each, 100 bitcoins are mined, and the price is 300$. 100 people would get mined bitcoins and 900 people would buy the bitcoins for 300$. Now, suppose the cost of mining bitcoins drops to 1$. Still, 100 people would get mined bitcoins, and 900 people would buy the bitcoins for 300$ each. Nothing has changed.

Furthermore, if it only costs 1$ to mine a bitcoin, then people would start mining like crazy and the difficulty would rise until the cost of mining a bitcoin is about 300$. The price of a bitcoin determines the cost of mining.

[franky1]

I think it does and here's why: If you can make a bitcoin for 1$, why would you buy one for 300$? It does influence the price, but it's not the only factor determining it's price.

Good point, I was kicking around the idea that btc was base pricing itself to the aggregate cost of mining, and now someone else confirms my suspicion..thanks.

Sorry. It is not a good point, because it assumes that the entire demand for bitcoins could be satisfied by mining. In fact, the number of bitcoins obtained by mining would not change, so the number of bitcoins traded on exchanges would not change.

For example, let's suppose that 1000 people want 1 bitcoin each, 100 bitcoins are mined, and the price is 300$. 100 people would get mined bitcoins and 900 people would buy the bitcoins for 300$. Now, suppose the cost of mining bitcoins drops to 1$. Still, 100 people would get mined bitcoins, and 900 people would buy the bitcoins for 300$ each. Nothing has changed.

Furthermore, if it only costs 1$ to mine a bitcoin, then people would start mining like crazy and the difficulty would rise until the cost of mining a bitcoin is about 300$. The price of a bitcoin determines the cost of mining.

the cost of mining wont drop to $1.. so give up on that mindset..

lets say that the cost of mining is about $300-$350 right now (epending on factors). right so
the 3600 sold 7 days ago sold for above $300,
the 3600 sold 6 days ago sold for above $300,
the 3600 sold 5 days ago sold for above $300,
the 3600 sold 4 days ago sold for above $300,
the 3600 sold 3 days ago sold for above $300,
the 3600 sold 2 days ago sold for above $300,
the 3600 sold 1 days ago sold for above $300,

so in the last week there has been atleast 25,000 coins that were sold for atleast $300.. and the buyers of those coins will not sell for less.. so now on the 8th day there is atleast 25000 coins of resistance point (wont sell below $300)

the only people that sell below this are the 'willy' bots and those that bought real cheap last year,.

eventually every sell is swapping funds into the hands of different people. and thus bringing more reinforcement to the resistance point.

that being said.. right now mining costs and mining sells are not really being done via exchanges, meaning that exchanges are left in the hands of the bots and whales.. thus we should not rely on these crappy exchanges as any guideline of supply or demand, as the bank movements do not compare to exchange price changes.

in 2012-20113 there were nice correlations between mining resistance points and exchange prices.. but this year the crappy exchanges are just controlled by devious bots, thus harder to predict.

if we went back to previous years (no withdraw limit) based exchanges, the true bank movement supply and demand would bring back a better and fairer view of the resistance points. but right now most miners are not trading on crappy public exchanges. thus we are seeing weak volumes and very weak resistance points.

[Nagle]

So some people claim that coins are worthless if the cost of production is near zero. Other people claim that it doesn't matter what the cost to producing a coin is as there are other factors that determine the price.

What are your opinions?

The cost of mining has little influence on the price of Bitcoin. The price of Bitcoin has a considerable influence on mining activity. Look at the price and difficulty charts for the last six months.

[bitnanigans]

A Bitcoin is worth what the market, or you as an individual is willing to pay for it. Basic rules of supply and demand apply.

[Q7]

Not sure how this goes about but cost of production can never be zero. No matter what you still need electricity to perform calculations. Unless you are at a place where electricity is fully free and hardware is donated. The bitcoin market price will be almost in parity with cost of production.

[devphp]

Price is linked to demand only. Demand is linked to unique use cases. Period.