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but dont confuse market price with intrinsic/underlying value
put it this way... if it
physically costs a farmer $0.50 to grow enough wheat for a loaf of bread
physically costs a bakery $0.10 to bake the dough into bread..
physically costs a truck driver $0.01 to deliver a loaf to a retailer
the bakery will not sell it to a retailer for less than $0.61
if the retailer has all its stock/shelf fillers and cashier labour costs and profit margins to meet share holders expectations. and refuses to sell for less than $1.50.. by putting a price ticket up for $1.50
guess what. a customer cant just say "im willing to pay $0.50, so heres 50cents, im taking the loaf, thank you, bye"
a retailer would rather call the security guard over and stop that customer leaving with the loaf.
the customer is instead going to pay what the retailer offers... not the other way round
breads intrinsic value is not the $1.50. . (the market PRICE is not the intrinsic value.. )
the intrinsic value (in my example) is somewhere above $0.61 but below $1.50(i never mentioned retailers true minimum costs added)
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Idk, what if for another farmer it will cost $0.30 to grow enough wheat for a loaf of bread, and for another bakery it will cost $0.05 to bake the dough into bread? What's the "intrinsic value" of a loaf of bread then?
I'm not an economist, but I still think that the "value" of something is what people are willing to pay for it at the moment. Please correct me if I'm wrong.
the PRICE... ill say this three times PRICE PRICE PRICE. is what people are willing to pay for it at the moment. as thats what they pay.. at that moment its this and at another moment its that. its speculative, unpredictable.. thats why the PRICE is volatile ..
but the PRICE.. is not value.
ill say it three times.. the PRICE.. is not VALUE. the price.. is NOT VALUE.
the concept is very simple...
FORGET THE RANDOM RATES and speculative stuff of whimsy and sentiment and profit..
thats all just speculation, the foam ontop of the latte. the bubbles at the top of the bath water..
like right now bitcoin mining costs between $0.03 to $0.38 per kwh in electric prices, where places like japan are the highest. and slavic nordic countries are the lowest.
this is not about what about japan 0.38. what about america 0.12 what about..
its about funding the ultimate bottom the actual bottom cost. concentrating on the $0.03
forget the 0.38 or the 0.12 "what abouts" find the 0.03.. and then math out the actual bottomline cost.
the random sentiment and variance above the bottom is all the many possible factors that build speculation.. but if you just stop thinking about all that and find the bottom cost. the cost no one can go below. then you have found the underlying value.
yes if things getr more efficient but the hashrate competition doesnt rise to compensate the underlying value can go down. but not to the same volatility/extent/temporality as the speculative sentiment of variables that are above that that are the market retail price.