The week of 01/18 in a nutshell – The news about Bitcoin and cryptocurrencies is in constant turmoil. It may happen that vital information gets lost in the daily news flow and you miss important points.

This format is there to remedy that. We come back to the news of the past week in the Crypto Weekly to keep you informed on the current situation of cryptocurrencies.

The unmissable of the corner

For the unmissable of this week Thomas continues his series on the fair price of mining a Bitcoin . After exploring Hayes‘ model, he seeks to apply his calculation of the cost of a Bitcoin Pro to a suitable investment strategy.

Starting from the Hayes equation

We saw in the previous article how a miner can determine the cost of producing a bitcoin based on his equipment. However, what interests me now is the investment, not the actual mining .

We looked for an iteration of the cost of production model that can be used to invest in Bitcoin . After a few hours on Medium, I found several relevant adaptations of this model. Among these we have that of Charles Edwards and that of Vikram Arun.

Arun took Hayes‘ model and reworked the equation so that he no longer had to worry about the computing power deployed by a miner.

Invest according to the production price

Once all this data has been collected, we can compile it in an Excel spreadsheet in order to model a range of production cost per bitcoin .

The cost of production serves as a floor value, and the price rarely drops below. The only notable exception is the second part of 2014 when the price of bitcoin is moving around 60% below its cost of production.

This irregularity can be partially explained by the bursting of a bubble in 2014. This bubble was almost as large as that of 2017 . However, its magnitude is less visible on the graph due to the logarithmic scale .

See the full article for more details on the strategy: How much is one bitcoin? In search of the right price .

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