The minimum Cost of Production Price of #Bitcoin 

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Summary: I present a bitcoin price indicator based on cost of production. It is constructed from hash, issuance and energy efficiency data that is available in the open. Only electricity price is (additionally) assumed. The indicator provides a potential alternative to the power law for estimating the fair value price of bitcoin. 

The current network hash rate of bitcoin is a whopping 650EH/s! Thats about 650000000000000000000 SHA256 int32 operations per second! This spectacular feat was achieved through the combined effort of a network of miners spread across the world. This has brought tremendous value to bitcoin by making it the most secure ledger ever created. 

At present, the cost of this global operation is paid for mainly by the block subsidy (i.e. by newly created bitcoin). One can express the relation between the total hash and the cost of producing it by a simple formula:

Hash = Efficiency . (breakeven) Price . Revenue (in BTC). 
or,
H = E.P.R  

Here, the breakeven price of bitcoin is the price at which mining is just profitable. Henceforth, I refer to this as the (minimum) Cost of Production or CoP Price. Efficiency (or dollar price of hash) represents the amount of hash that the network can produce per dollar of cash spent. 

Since H, E and R can be determined independently, the above formula can be used to estimate CoP price:

CoP Price  =  H / (ER)

https://m.primal.net/KQey.png 
https://m.primal.net/KQfB.png 


Related work/Further reading: 
[1]. https://x.com/IIICapital/status/1547953224555999233 
@IIICapital
 
[2].  https://medium.com/@paulewaulpaul/bitcoin-difficulty-per-issuance-a-pow-pricing-model-452cd8a3017b 
@paulewaulpaul
 
[3]. https://x.com/moneyordebt/status/1814322194354471081 by 
@moneyordebt
 for more insight.