Bitcoin costs at least

*Based on the energy cost to create each coin. Learn more?

The global hash rate (in terahashes), block reward, and blocks per hour.

Global Hash Rate: 40,419,149.88 TH/s

Block Reward: 12.5 BTC

Blocks/hour: 6

The best consumer mining rig's hash rate and energy consumption.

Device Name: Ebang Ebit E10

Hash Rate: 18 TH/s

Energy Consumption: 1.65 kW/h

The average industrial cost per kilowatt hour of electricity.

Energy Cost: $0.07 kW/h

*ĥ* = global hash rate (TH/s)

*ĥ _{m}* = individual miner's hash rate (TH/s)

*e _{m}* = individual miner's energy consumption (kWh)

*c* = energy cost (kWh USD)

*β* = blocks per hour

*r* = block reward (btc)

*m* = total number of simulated miners

*c _{mb}* = energy cost per miner per block (USD)

*v* = bitcoin intrinsic value (USD)

First, find the total number of simulated miners ** m** in the best case scenario (all using best combination of hash rate and energy consumption).

Second, find the energy cost per miner per block ** c_{mb}** in kilowatts-per-hour by dividing the energy consumption of an individual miner in kWh by the number of blocks found in an hour, and then multiplying the result by the constant cost of each kilowatt hour.

$$m = {ĥ \over ĥ_m}, c_{mb} = c{e_m \over β}$$

Finally, the lower bound on the intrinsic value of a coin's generation is the total system energy cost per block divided by the number of coins generated per block.

$$v = {m \times c_{mb} \over r}$$

With *2,245,508 miners* and an *individual energy cost of $0.019 kW/h* the system energy cost per block is $42,670. Since the current block reward is 12.5 BTC then the energy cost per coin is **$3,413.62**.

*A more detailed description is available in this blog post: A Bitcoin Valuation Experiment.*

The energy cost to create a Bitcoin is akin to its “melt value” were it a piece of metal.

We can see how much of Bitcoin's price might be speculation.

Market Value

Intrinsic Value

Extrinsic Value

Speculation

Name | Algorithm | Hashrate | Optimal Rig | Energy | Blocks/hr | Min. Value | Speculation |
---|---|---|---|---|---|---|---|

Bitcoin | SHA256 | 40,419,150 TH/s | 18 TH/s @ 1.65 kW/h | 3.71 gW | 6 | $3,413.62 | 7% |

Ethereum | Ethash | 168 TH/s | 0.000192 TH/s @ 1.10 kW/h | 0.96 gW | 240 | $92.35 | 5% |

Litecoin | Scrypt | 158 TH/s | 0.00058 TH/s @ 0.93 kW/h | 0.25 gW | 24 | $29.11 | -10% |

Bitcoin Cash - ABC | SHA256 | 3,472,000 TH/s | 18 TH/s @ 1.65 kW/h | 0.32 gW | 6 | $293.23 | -183% |

Bitcoin Cash - SV | SHA256 | 4,098,000 TH/s | 18 TH/s @ 1.65 kW/h | 0.38 gW | 6 | $346.10 | -251% |