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₿Hodl

#Bitcoin value = (10min X (( Hashrate X 60sec) X energy cost by minutes))) ÷ mining reward

Is that right?

infinite ÷ 21Millions

https://fountain.fm/clip/ncW6vc40Op675em7hd3T

Another Dude 1y ago 💬 1

Not exactly. What you’re describing is intrinsic value.

Intrinsic value is a concept from the early 19th century that probably has little place in today’s world.

Subjective Value (Carl Menger) came about in the Late 19th century and still fits today.

ie. people pay for an open market value (what they subjectively think it’s worth), irregardless of cost.

Not to totally discount intrinsic value. I personally think it provides a valuable baseline for the value of something irrespective of subjective value. Although subjective value is a stronger metric and can smash that in a heartbeat.

If you use TSLA as a brand example.

Its current market price is probably at least conservatively 70% overvalued and according to some 300%+ overvalued.

#Bitcoin is limited to 21M, is POW, is mathematically proven and the world’s first hard money.

So in terms of intrinsic AND subjective value it’s seemingly a no brainer.

Anyway.. I like your thinking 👍 But don’t discount subjective value.

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₿Hodl 1y ago 💬 1

Nicely said! 👍 But can we say that for calculating the intrinsic value of bitcoin, there is a missing variable, the demand. If the demand for bitcoins is higher or lower than the block reward, the intrinsic value can be higher or lower than its cost of production.

Another Dude 1y ago

Absolutely, demand is a huge variable.

Although, intrinsic value is more to do with cost of production, not necessarily taking into account demand.

But to your point, yes demand is crucial and certainly factors in.

Iintrinsic value or cost of production is more affected by energy costs, miners cash-flow etc. and less by demand. Although it does impact indirectly by contributing to miner sell pressure and how much is released onto the market at any given time.

Production of newly mined Bitcoin is almost a mathematical constant due to the genius of Satoshi’s programming by way of halving events and the difficulty adjustment. So it costs what it costs.

The cost of production will go up forever as the limited 21M supply decreases through halving events and the difficulty adjustment increases, making it harder and more costly to mine (produce).

The deflationary aspect of Demand vs shrinking supply is the multiplying effect on top, that further increases the market value.

Sorry.. I may be repeating myself a bit or off topic.. can’t think straight with the flu, but you’ll get the gist 👍