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: 121,318,945.79 TH/s

Block Reward: 6.25 BTC

Blocks/hour: 6

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

Device Name: Antminer S17 Pro

Hash Rate: 53 TH/s

Energy Consumption: 2.09 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 *2,289,037 miners* and an *individual energy cost of $0.024 kW/h* the system energy cost per block is $55,202. Since the current block reward is 6.25 BTC then the energy cost per coin is **$8,832.35**.

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

The energy cost to create a Bitcoin is akin to the cost of digging up and processing ore as if it 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

Cost

Speculation

Bitcoin

SHA256

121,318,946 TH/s

53 TH/s @ 2.09 kW/h

4.79 gW

6

$8,832.35

23%

Ethereum

Ethash

199 TH/s

0.000192 TH/s @ 1.10 kW/h

1.14 gW

240

$164.17

58%

Litecoin

Scrypt

283 TH/s

0.000596 TH/s @ 1.05 kW/h

0.50 gW

24

$114.81

-114%

Bitcoin Cash

SHA256

284,023 TH/s

53 TH/s @ 2.09 kW/h

0.01 gW

6

$10.34

96%

Bitcoin SV

SHA256

197,647 TH/s

53 TH/s @ 2.09 kW/h

0.01 gW

6

$7.19

96%