Replying to Avatar Not a Polar Bear

I think the point is…

Hash rate = fn (BTCprice, ElectricCost, MiningRigCost)

I don’t know what that formula is but in general terms examples are…

BTC price goes up - more miners join in

Electric cost goes up - miners shut down or move

Mining rigs are cheaper to buy - new miners join the fray.

There will be a momentum factor in the formula: eg: miners don’t go bust overnight but can run on reserves for a while, it takes a while for new mining rigs to reach market, etc
5a
Milos 1mo ago 💬 1

I might be a little slow here, but why does this mean that the production cost can serve as a floor for price?

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Not a Polar Bear 1mo ago 💬 1

My thoughts on this…

If the miners have enough financial reserves - and that’s the big if - they will not sell to the market below their production cost. They will hold for as long as they need/can. Miners holding back their production will *possibly* cause a shortage of supply and stop the price taking any further: a price floor.

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Not a Polar Bear 1mo ago 💬 1

Oops. “… stop the price FALLING any further”

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Milos 1mo ago

That’s a good point, thanks! I guess since prices are set at the margin, fresh supply might be a very significant part of the traded volume on a given day.