Quote from: picollo7 on May 26, 2011, 05:00:52 PM

Quote from: cloud9 on May 26, 2011, 08:02:49 AM

Assuming all else stays proportionally the same as the status quo the following is an attempt at an evaluation of BTC value:

- Total current network hash: 3.913 Thash/s (Source: http://bitcoincharts.com/ )
- Assume typical economical miner's hash : 300 Mhash/s (Source: http://bitcointalk.org mining forums) - Stand to be corrected
- Assumed estimate of total economically mining machines: 13 000 approximately
- Assume $1000 capital cost per economically mining machine, gives a total network capital cost of $13 million
- Depreciating asset capital cost depreciated over a five year term, gives $2,6 million capital cost depreciation per year.
- Expected Return on capital investment per year (assume 20% - high risk investment), gives $2,6 million return on investment cost.
- Running cost: electricity, assume 0.5kWh power consumption per machine, at $0.15/kWh assumed average worldwide cost, gives 13 000 x 24 x 365 x 0.5 x 0.15 = $8,5 million total yearly electricity running cost
- Running cost: rent, salaries, etc, assume just 100% (reimbursing the average miner on a machine only $1000!!! per year!!!! in salaries and rental space) yearly on capital cost, gives $13 million
- Maintenance cost, assume 2% yearly on capital, gives $0,25 million.
- Bringing us to an assumed total yearly cost to business for the Bitcoin network of $26,95 million. The network generates a total of 50BTC roughly every 10 minutes at present, thus 10 x 6 x 24 x 365 = approximately 525 600 BTC per year. The total cost per BTC generated securely and maintaining the network at present will thus be approximately $26,95 million divided by 525 600 = approximately $51.27!!!! Is it a small price to pay for the owner's rights to secure entries in a global digital cryptographic key accounting system - which subsequently allows the owner of the rights to transfer some/all of those rights securely?

Now this cost of $51.27 per BTC is for maintaining a network difficulty of 244139.48158254 ( http://blockexplorer.com/q/getdifficulty ) at present. When more BTC mining machines are added making the network more secure and difficulty increases ( http://bitcoin.sipa.be/ ) but the bitcoin generation rate remains unchanged - this will result in an increase of BTC securing/generating cost. Maximum difficulty never to be reached is 2^224 ( https://en.bitcoin.it/wiki/Difficulty#What_is_the_maximum_difficulty? )

EXCELLENT! I like your way, I took this and changed some of the assumptions, and got a value of $9.08 per BTC. (You made a calculation error with yearly BTC, 50 BTC generated 6 times an hour 24 hours a day 365 days a year is 2,628,000 BTC per year. That 10 in the formula should be a 50, so your analysis would give about $5.13).
Anyhow, this does not take into account growth rates. So obviously this will change. But its a great start.

Thanks picollo7 for pointing out my oversight, I will post the correction.