Quote from: Goldstein on April 06, 2010, 05:32:48 PM

One thing that concerns me is how people are calculating how much it costs to generate a Bitcoin. For instance, NewLibertyStandard has determined the value by "the yearly average of the bitcoins generated per day divided by the yearly average of the amount of dollars spent per day on Internet and electricity or (bitcoins generated)/(cost of bitcoins)."

This is a good point.
I was just trying to come up with a number for how much it costs to produce bitcoins.
Here is my data on electrical use, depreciation of CPU, and internet connection:

Electricity
CPU running at 100% when no other tasks (most of the time) gives about 800 khash/s
Time to generate avg block - 27 hrs
Power required to run whole computer - 0.4 amp, 44 W (say CPU takes 80% of this, 35.2 W)
Electricity used - 27hrs * 35.2 W = 0.246 kWh
Electricity cost for me is about $0.08/kwh
Cost for 50 bc is 10.246*0.08= $0.1968
cost per coin is $0.0003936

CPU depreciation
Life of my average computer is about 5 yrs
Since I usually don't average above 50% cpu for the time it is on.
I predict the extra time at 100% will take the life down to 3-4 yrs
When I bought it last year the machine was $700
When I replace it it will likely cost $350
Cost per year originally was $350/5years = $70.00/yr
Cost per year with reduced life is $350/4yrs = $87.50/yr
Cost 1yr = $17.50
Cost per block at 27hrs = $0.0539
Cost per coin = $0.001078

Internet connection
My bitcoin nodes each use about 2kbps
My total practical bandwidth is 100kbps
This connection costs me $25/month or $0.90/block
% of bandwidth used is 2% so cost/block is $0.018
Cost per coin is $0.00036

Totals
Electric - $0.0003936
Depreciation - $0.0010780
Internet - $0.0003600

Cost/coin - $0.0018316

I would appreciate feedback to improve this model since it may be helpful to new bitcoin users.