Mining Economics and the Price of Bitcoin
August 4, 2022
The price volatility of bitcoin is largely, though not entirely, related to the economics of mining, which are related to the cost of production, which includes the price of the machines and electricity consumption.
When the price of the most effective servers is reduced, the price of bitcoin reacts, because that means it is less expensive to mine. That changes the bitcoin mining economics, because one has to invest less money for the same bitcoin block reward.
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Horizon Kinetics LLC
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