BTC Production Cost, Bitcoin as Inflation Hedge, and Fuel Deep Dive
JUL 18, 2022 • 6 Min Read
Disclosure: Delphi Ventures and members of our team are invested in BTC, ETH and SOL. Delphi Venture
Chart of The Day: BTC Price Bounces After Hitting Production Cost
Over the past 5 years, the electrical expenditure to mine 1 BTC has consistently represented a price floor for Bitcoin. Indeed, BTC price has only matched the electrical cost of production (excluding all other costs of mining) 3 times within the past 5 years: in Dec-2018, Mar-2020, and most recently, in Jun-2022.- Currently, the estimated electrical cost of production stands at just over $16k, with the estimated total cost of production hovering around $26.6k. These estimates and the historical data depicted in the chart above are based on calculations proposed by Capriole Investments Ltd.
- Although most studies use data from the Cambridge Bitcoin Electricity Consumption Index (CBECI), estimates for the cost of production vary across the industry, depending on how other inputs are utilized. Last week, JP Morgan released their updated electrical cost of production estimate to $13k, which they attributed to more power-efficient miners
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