Is BTC trading price connected to mining cost?

ction between BTC trading price and the cost of mining. A couple of starting questions would be...

  1. I've read that mining 1 BTC currently costs around 6000 USD. How does the distance of the trading price from the mining cost effect the network? If the price gets closer to the cost then I assume that there is less incentive to mine? Does this then reduce mining difficulty, reducing the cost so that the "distance" remains at a relatively constant factor?

  2. I've read arguments that as mining costs increase this causes the trading price to increase, but I can't see how increasing mining costs would have a positive effect in this direction?

So I guess Question 1 is about how BTC price affects mining costs, and Question 2 is about how mining costs a

Bitcoin | 👁 1020 | Posted 2018-11-20 | Share on Facebook | Twitter | Google+

| Modified: 2018-11-20 | Author:


ZedZeroth 2 years ago

Thanks, I had got the impression that 6k USD was as cheap as it gets but now I've done more research I see that you are right that there is a huge variation in costs around the world!

baryluk 2 years ago

They will not stop immediately. They will most likely still mine, just not move coins out of their wallets, unless they believe the price will never recover or they are really short on money to run operations (electricity mainly).

obedientbeta 2 years ago

It's only $1800 to mine in China, where most of the mining goes on.

JeremyBF 2 years ago

Sort of (but mostly no) .... People mining above market value will have incentive to not sell those coins which will reduce the supply and help keep the price up, but if the price stays below their cost for long enough they will go broke and have to sell lowering the price a little and leaving the mining to those who get cheaper electricity. The new coins are an important part of the liquid supply, but the current liquid supply is much higher than any new coin supply so the mining cost affect on the market value is limited.

gamercer 2 years ago

I don't understand why it would be, but wasn't this one of Mcafee's reason's for choosing the price and time he did?

chocolatesouffle3 2 years ago

As "connected" as gold mining costs are to gold price. Not in a deterministic way though. Value is subjective, no matter what the costs are to produce, For example, it would cost a lot to make a sandcastle model of the universe, but how much is it worth to you?

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