The Total Cost of Bitcoin Mining and the Market to Known Value Ratio

This report introduces the concept of Bitcoin and MVRV mining price and describes the patterns of the above indicators and their impact in recent years.

number 1

All fees are paid to minors

Fees paid to miners come in the form of a reward block or blocking income, and the total amount paid to miners after each Bitcoin exchange is completed. Recognition of the Bitcoin market must be completed by miners and is an integral part of the traditional functioning of the Bitcoin network. For this reason, most miners have to use a lot of calculators and energy to get the most out of their activities. When you add a block to a blockchain, you can earn a reward (currently 6.25 bitcoins), including the amount required to block that block. Therefore, due to financial support, the miner's staff will play a key role in completing the cost of more than just a job analysis. Analysts say miners will likely hike exchange rates to pay for unemployment benefits.

As shown in Figure 1, during the period from January 1, 2017 to August 1, 2020, when Bitcoin prices were flat or falling, the overall price of miners remained stable. However, as the price of Bitcoin rises, so does the cost of mining. In the livestock market in 2017, total mining costs increased and total costs increased from $ 1 billion to $ 2,000 billion.

For every 210,000 blocks mined, or every 4 years, the average Bitcoin miner received in the market is half, which halves the value of new Bitcoin in circulation. The 4 year semester is the Bitcoin symbol inflation method which ensures that all Bitcoins are mined and distributed. Each halving reduces the minor's income. The most recent half occurred in May 2020, with Bitcoin freebies dropping 50% to 6.25 Bitcoin. With increasing adoption and declining finance, investors expect the price of Bitcoin to suffer in the long run.

As shown in Figure 2, on the ninth day of the halving, Bitcoin miners' total foreign exchange earnings increased 44% from their total earnings in April. In March, the miners received $ 30,231,923 in exchange rates. Meanwhile, before halving, miners 'commission income in April was $ 604,370, and in June after halftime, miners' commission income was $ 1195,581.

N ° 2

MVRV (ratio of market value to realized value)

Market Value for Approved Values ​​(MVRV) refers to the ratio of its market value to its known profitability and is used as a measure of whether an asset's current value proposition is higher or lower. Market value is determined by multiplying the final competitive price by the amount of money in circulation. The book value is close to the book value of the existing currency, which is the market value of the currency at the time of the last term change. The MVRV is a long-term indicator and is only appropriate for long-term evaluations such as multi-year evaluations.

As shown in Figure 4, when the market price is greater than the known value (for example, when the MVRV is less than 1), the best time to collect bitcoin is. The data that Bitcoin's MVRV is lower 1-4 years ago is that when Bitcoin's price fell below $ 6,000 in 2019, Bitcoin's MVRV is 1-6 consecutive months lower, etc. year. When the price of Bitcoin fell below $ 5,000, Bitcoin's MVRV fell below 1 for an entire month.

Interestingly, this does not mean that the value of Bitcoin will be overvalued. A look at the previous price list shows that even though MVRV is above 1, there is still room for the price of Bitcoin to rise. Some traders believe that Bitcoin is considered more valuable if its MVRV ratio is above 3.7. For example, in a bull market in 2017, when the price of Bitcoin crossed the 3.7 mark mark of around $ 17,500, the value of Bitcoin plunged to $ 7,000, a drop of 60%. . According to the business strategy of MVRV, the trader can buy in February 2017, November 2018, March 2020 and make 4 long-term transactions in the last three years in the beef industry in December 2017.