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Are there any approximations to the average cost of mining of a BTC over time?
The reason I ask is because I think that as this ratio will affect the general availability of Bitcoins on MtGox, and will be a factor influencing the price.
In other words miners won't sell BTC at a loss, while competition increases and BTCs per block decrease.
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This is a chart of blockchain.info's estimated miner operating profit.
The chart makes a number of assumptions which are listed below.
Electricity consumption is estimated based on power consumption of 650 Watts per gigahash and electricity price of 15 cent per kilowatt hour. In reality some miners will be more or less efficient.
For profit margin hardware costs are estimated to be $1000 per gigahash every 2 years, and bandwidth $1 per gigahash per year.
It is also entirely possible that miners will start only accepting transactions that pay fees, and possibly increase the amount of fees they take to increase the amount of BTC per block. But the amount of fresh bitcoins taken from mining will almost certainly affect the price.
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The way I think about Bitcoin is like this:
Bob wants to conduct a transaction with Alice using Bitcoin. Who can help Alice prove that she really owns and is giving Bob the number of Bitcoins that she says that she is?
Someone with a really fast computer. Luckily, Manny has one of those. Manny will gladly help Alice and Bob out, but only if his costs are paid for and he gets a little something for his effort. The proof takes energy, and energy has a cost. So does Manny's equipment. And, quite honestly, Manny would rather be on the beach than spending time purchasing, installing, and tending to that equipment. (not the mention the risk Manny is taking by owning all that expensive equipment in the first case). But he is rewarded/paid enough that he will run the proof.
The average cost of a bitcoin will tend toward the cost of mining a bitcoin (or earning a bitcoin in fees). It would be interesting to compare at this time given that the cost of a bitcoin is easily measurable in USD, EUR and the like. Cost of equipment and energy are relatively easy to know, which could make measuring real fiat labor costs relatively easy. Then again, it is difficult to know how many see this as a hobby (or are teenagers/young adults stealing electricity from their parents).
The typical GPU miner was cash-poor and thus couldn't speculate on the exchange rate that much. The cost of production (electric bills) had to be paid from either bitcoin mining revenues or from bitcoin savings, thus when the exchange rate dropped they were likely to sell MORE bitcoins simply because the cash flows required it. FPGA and now ASIC change that, such that the expenditure is up-front, for capital and then operating costs are much lower so fewer bitcoins are sold with that category of miner. – Stephen Gornick – 2013-02-13T21:39:31.997
@StephenGornick - That is exactly the line of thinking I need to attempt to forecast those who mine then save, vs those who mine then spend. It would be useful to track (or estimate) the horsepower in each category. – goodguys_activate – 2013-02-13T22:24:08.383