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Old 17th June 2020, 05:54 PM   #606
Roger Ramjets
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Originally Posted by psionl0 View Post
The estimated cost to mine a bitcoin varies from web site to web site.
Weasel words. Even if every website published precisely accurate figures (an obvious impossibility given that not all Bitcoin miners are registered companies who have to declare their costs) since costs vary over time the figures are expected to vary. That doesn't justify your assertion that the numbers have ZERO reliability.

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It should be so simple. Given the estimated total average power being used globally to mine for bitcoins, you multiply that by 1/6 hours and divide by 6.25 bitcoins to get the number of KWh needed to mine a single bitcoin.
Simple, but not so 'reliable'. The estimated total average power being used globally to mine for bitcoins is just that - an estimate. There is no reason to believe it is more accurate than other methods (eg. getting cost information directly from miners).

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But do you think that any web site will give you raw data like that? No. All you get is pre-digested conclusions.
Conclusions like "the Antminer S9... Given current difficulty, 0.04$/kWh and S9 running custom firmware bringing it down to 71W per TH efficiency. The cost to mine 1 BTC is $8206.64"? Is that data not 'raw' enough for you?

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You are making this efficient market hypothesis backwards. The cost of mining bitcoin depends on the price of bitcoin (or its perceived long term price). If the price of bitcoin rises then more miners will find it profitable to join the fray thus pushing up the production cost and if the price of bitcoin falls then some existing miners will find that producing bitcoin is unprofitable and drop out thus lowering the production cost for other miners.
The proximate cost of mining Bitcoin is the difficulty level. This has nothing to do with the price.

A short introduction to Bitcoin mining difficulty
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The mining difficulty is adjusted every 2016 blocks which are approximately 2 weeks considering an average of 10 minutes per block. Bitcoin algorithm provides this adjustment very easily. If the previous 2016 blocks took more or less than 2 weeks to find, the difficulty is increased or decreased in the proportion of the amount of time difference to the 2 weeks.

This difficulty needs to be adjusted because there are variations on how much computing power, i.e. the total hash rate exists in the Bitcoin network. More miners contributing, bigger the total hash rate and the need to increase the difficulty...

However, in 2018 we are seeing a rather strange behavior. Although Bitcoin price has dropped quite a lot, more than 80% from the all-time high, the mining difficulty has been keeping to rise like crazy! The hash rate (and total mining power) grows 3.5x in 2018 and at the same time, the price has dropped 80%.

This fact leads to the worst moment in the history of Bitcoin mining. Even the recent drop of the mining difficulty is not enough to keep up with the price drop and keep decent profitability level to miners.
And it's happening again.

Bitcoin has just posted its biggest mining difficulty increase in nearly 2.5 years.
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The 14.95% rise is the biggest difficulty jump since January 2018, which saw a larger spike on the back of the 2017 crypto market bull run, data compiled by BTC.com shows.

As a result, miners contributing hashing power to the network are now facing the fourth-most difficult two-week mining period in Bitcoin’s history.

“With the value of hashrate set to decrease to $0.075 cents per TH/s, not many of the existing, old-gen equipment will turn back on,” said Ethan Vera, co-founder and CFO of the Luxor mining pool. “New hashrate coming onto the market will likely be driven by new-gen and high-efficiency machines.”

Kevin Zhang, director of blockchain strategies at New York-based bitcoin mining-power plant hybrid Greenidge Generation, offered a similar view, saying the firm’s strategy is to stay competitive by procuring and running the latest-generation equipment.

Despite limited price action, we expect the hash rate to continue rising in the near term as more older generation miners go offline and newer generation ones come online,” he said.
Miners get more advanced hardware that processes the blockchain faster, causing the difficulty level to rise. This is the reason mining costs go up. When the price goes down these more efficient miners are still working, so the difficulty rate stays high until they stop running because the price has dropped below cost. In theory the cost and price should converge, but in practice the feedback delays and external factors (improved tech, changing power prices etc.) can cause the opposite as the feedback turns positive or chaotic.
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