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Re: Hypothesis - bitcoin price is directly related to electricity consumption
by
stompix
on 19/03/2021, 18:21:45 UTC
⭐ Merited by philipma1957 (1)
Your assumption has one major flaw

If you look at the price and hashrate evolution you will see that hashrate has not managed to keep up with the rise in price, and thus energy consumption, why? Simple because there is no gear to burn that electricity and mine available.
As of right now, those two indicators are so far away it makes no sense trying to find any relation between them.

The second problem is that electricity consumption follows price, miners don't buy gear, plug it in and then think wait, we need to raise the price to x level to make mining profitable, it's completely the opposite if the price goes up, profits increase buying gear becomes a good investment, electric consumption goes up.

Now to your assumption:
Quote
Assertion – the proportion of worldwide electricity generation that may be consumed by the Bitcoin network cannot exceed 1%.
Why? Who is stopping it to go to 1.0007%?

Quote
Between now and the next halving (mid 2024) the maximum sustained high we should expect the bitcoin price to reach will be no more than about $95,000.

Who is sustaining this price? One thing I can tell you for sure, it's not miners.
Now, to understand simply why your projected growth is not realistic you should look at your own numbers:

You're capping the price at double the current one based on the assumption that bitcoin staying at a certain level requires 0.47% of the world production which is false.

The problem arises with the fact that even if the price doesn't move, with current profitability if enough gear will be released on the market the power consumption could still double even if the price retracts.
Remember that we were doing around 130EH/s when the price was 10k, and now we're barely at 160EX.
So if the electric consumption was already at 0.3-0.4% when the price was at 10k it means that we're already above the levels imposed by your 1% limit.