Denver’s Derivative — How To Gauge The Price Of A Bitcoin ASIC
An incredibly interesting way to figure out the value of an ASIC given its consumption and profitability over an extended period of time.This article is to serve as nothing more than a contribution to the bitcoin mining...
Archive context
Older archive item. Useful for background and entity history, but not a fresh market-moving signal.
An incredibly interesting way to figure out the value of an ASIC given its consumption and profitability over an extended period of time.
This article is to serve as nothing more than a contribution to the bitcoin mining community.
I’m not a mathematician.
I’m not a statistician nor a certified economist.
I’m just a bitcoin miner, a builder, and a freethinker that loves spreadsheets and algebra and, for the last four years, I’ve been trying to figure out a way to properly value bitcoin ASICs at any given time while taking into consideration overall market conditions.
The following is the evolved calculation I have used to determine whether or not I should pull the trigger and purchase an ASIC — or rather this is a calculation that helps me from becoming overzealous and overpaying for hardware. I’ve been inspired to share this by the phenomenal folks in DBF.
It has kept me from making mistakes, hopefully you find it to be useful.
Denver’s Derivative ExplainedSome terms to define:
- Watts/Th = An ASIC’s total watt consumption divided by its nominal Th/s rating.
- $/Th = The total cost of an ASIC divided by its nominal Th/s rating.
- WattDollar = The product of an ASIC’s watts/Th multiplied by $/Th.
- Hash price = USD value of 1 Th/s over the course of 24 hours.
- Elongated hash price = USD value of 1 Th/s over the course of 50,000 blocks.
Denver’s Derivative (DD) = WattDollar/Elongated hash price =
- >50 = If your power is less than ~$0.035 OR you’re going to run the ASIC for five-plus years.
Why this matters
This mining story adds another data point to the current market tape and is useful when read alongside nearby source coverage.
Original source
Read on Bitcoin MagazineRelated market context
Will proposed faster block times really fix Ethereum’s biggest market losses?
Ethereum developers are weighing Ethereum Quick Slots for Hegotá, a proposed faster block rhythm that would reduce waiting without...
Offshore Bitcoin futures crash 97% as traders abandon traditional risk
A strange thing has happened to Bitcoin's derivatives market over the past five years. The market is larger, institutions play a m...
Bitcoin’s $84K rally isn’t saving miners as difficulty signals already flash caution
Bitcoin’s post-retarget relief for miners was real, but narrow. Using a BTC price of $84,751, the completed difficulty increase an...
Hyperliquid hits all-time high of $92 amid new borrowing feature
The rise in Hyperliquid's value highlights increased utility and demand, but future growth faces potential regulatory and competit...
Hyperliquid open interest surges above $8B, hits all-time high
Hyperliquid's rise highlights the growing shift towards decentralized finance, challenging traditional derivatives markets and exp...
Why Legendary Investor Bill Miller IV has “Never Been More Bullish on Bitcoin”
Bitcoin Magazine Why Legendary Investor Bill Miller IV has “Never Been More Bullish on Bitcoin” Bitcoin’s market cap sits roughly...