Bitcoin costs at least $3,389.58 to mine.


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


Why?

Bitcoin's price is a composition of intrinsic and extrinsic factors. Based on the energy cost it takes to create each coin, we can establish bounds for its value.

Our Methodology

93,116,968 TH/s

Blockchain

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

Blockchain

Global Hash Rate: 93,116,968.01 TH/s

Block Reward: 12.5 BTC

Blocks/hour: 6

53 TH/s

Mining

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

Mining

Device Name: Antminer S17 Pro

Hash Rate: 53 TH/s

Energy Consumption: 2.09 kW/h

$0.07 kW/h

Energy

The average industrial cost per kilowatt hour of electricity.

Energy

Energy Cost: $0.07 kW/h

The Math

Variables

Let the following be assigned:

ĥ = global hash rate (TH/s)

ĥm = individual miner's hash rate (TH/s)

em = 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

cmb = energy cost per miner per block (USD)

v = bitcoin intrinsic value (USD)

Equations

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 cmb 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.

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

Results

With 1,756,924 miners and an individual energy cost of $0.024 kW/h the system energy cost per block is $42,370. Since the current block reward is 12.5 BTC then the energy cost per coin is $3,389.58.

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

Think of it Like

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.

What's It Worth?

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

7523

Market Value

3390

Intrinsic Value

4133

Extrinsic Value

55

Speculation

Proof of Work Cryptocurrencies

Name
Algorithm
Hashrate
Optimal Rig
Energy
Blocks/hr
Cost
Speculation
Bitcoin
SHA256
93,116,968 TH/s
53 TH/s @ 2.09 kW/h
3.68 gW
6
$3,389.58
55%
Ethereum
Ethash
189 TH/s
0.000192 TH/s @ 1.10 kW/h
1.08 gW
240
$103.83
35%
Litecoin
Scrypt
424 TH/s
0.000596 TH/s @ 1.05 kW/h
0.75 gW
24
$172.02
-247%
Bitcoin Cash
SHA256
250,574 TH/s
53 TH/s @ 2.09 kW/h
0.01 gW
6
$9.12
96%
Bitcoin SV
SHA256
125,533 TH/s
53 TH/s @ 2.09 kW/h
0.00 gW
6
$4.57
95%