That's not how it works. If you spent $100 in electricity and you have an asset that's worth $50, you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity.
Electricity cost of mining does not set a price floor. The price floor is 0.
Obivously, the meaning of the original sentence is that miners will turn off the mining equipment when they decide that it's more profitable to leave it off than leave it on.
> …you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity.
This is a false dilemma, the question is not just whether you sell the coins, but also how many, with what timing, on what markets, and in exchange for what. The “either sell it and make some money back, or don’t sell it and eat the loss” is only true if you are paying for your electricity in Bitcoin to begin with, or if you know that the asset you have will only depreciate in value. If I spent $10,000 on a car that I don’t need, selling it for $8,000 might be a good deal because if I wait I will only get less. For Bitcoin, the exchange rate fluctuates, and you can divide it and sell parts at different times.
Well, it all depends on price of electricity in your region. If you mine for almost free using solar/other renewable energy/your energy is subsidized by government then you will still make profit while miners in high cost electricity regions will stop mining. If they stop mining difficulty will drop, which means you will get more money for mining.
This is self regulating mechanism, as long as bitcoin will have value it will be profitable to mine for someone.
Even with renewable energy there's an opportunity cost - you can sell it back to the grid. Plus the fixed costs of buying the solar panels and mining equipment in the first place.
In many cases this doesn't matter, as it 's being paid by someone else. Millions of teenagers mining crypto on their GPUs, their parents pay for electricity, what about enthusiasts? They will mine even if price is higher than the value of the bitcoin, there are bitcoin mines that steal electricity from the grid etc.
And as I wrote before, this is self regulating mechanism, difficulty is adjusted every 2016 blocks. Less miners? then less power needed to mine the block, which means less resources/money needed to mine the block. Price of electricity dosen't matter.
> …you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity.
This is what I disagree with.
This doesn't cause a price floor either as fewer miners does not correspond to a drop in supply. The cost for miners has no causal effect on the price of Bitcoin because the new supply of Bitcoin is constant.
Note that this is somewhat counterintuitive compared to "physical" mining (of gold, copper, oil, etc), where fewer miners correspond to less supply (which usually causes an increase in price).
TLDR: there is no price floor for Bitcoin based on the mining price
In the same way if all the buyer wants to pay is 50% of what the seller is quoting, and there are no other buyers around or they too want it for a 50% discount, 50% discounted price is what the price is.
> In the same way if all the buyer wants to pay is 50% of what the seller is quoting, and there are no other buyers around or they too want it for a 50% discount, 50% discounted price is what the price is.
Let's say I want to sell for $10 but you're the only "buyer" and you only want to pay $5.
You are saying that the actual price is $5... this is not true. There is no actual price, because there is no transaction. I am not a seller, because I haven't sold anything (I've only offered to sell). You're not a buyer, because you haven't bought anything (you've only offered to buy). The "bid price" is $5 and the "ask price" is $10. The "actual price" does not exist until there is an actual transaction.
You see similar economics when farmers sell crops at a net loss.
Hell, the entire economy makes no guarantees at being sustainable in the long run. The unsustainability period just shows all indications of being longer than a human lifespan, thereby making it easy for people to write off as not their problem.
And the comment you replied to did not even mention the other marginal costs that Bitcoin faces (employee costs, land rental, networking costs, etc).
Assuming you can only either sell or loose the money fails to take temporal effects into account, ie the fact that there is such a thing as time progressing that changes variables.