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 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.

Some 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.