The objective, energetic economic value of BTC
309 sats \ 10 comments \ @617a7a 7 Jun 2022 bitcoin
Bitcoin’s value originates from the enormous amounts of energy used (which is a good thing) to create it in proof-of-work.
Instead of valuing goods and services in BTC through using the USD price (price ≠ value), which uses the exchange rate, we should value (and so forth price) Bitcoin prices in energy (Joules).
You can scientifically calculate the amount of energy (in labour) used to create the good, then use the average energy in joules used to develop a satoshi to calculate the value. Price can be determined from the value, but it is not equal to the value, usually.
Some quick calculations for the energy/sat:
233.4 EH/s is 233,400,000 TH/s
At 30J/TH, that’s 7,002,000,000 J per second
Over 10 minutes (600 seconds), that’s 4201200000000 J spent per block.
The current block reward is 6.25 BTC or 625,000,000 sats, giving each satoshi a rough energy value of 6721.92 joules.
Of course, this isn’t perfect, and a better model would be to use a moving average, but I’m writing this on my phone and can’t be bothered to build a custom index for this yet.
For context, a medium apple contains about 395 kJ, or the value equivalent of 59 sats. This isn’t really useful however, as you’re not paying for the energy in the apple, but rather the energy required to produce the apple in the first place.
Thoughts?
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50 sats \ 1 reply \ @mf 7 Jun 2022
I've been thinking about the framework as well, mainly to try to figure out how the btc pricing could be "stable" and objective.
For context, a medium apple contains about 395 kJ, or the value equivalent of 59 sats. This isn’t really useful however, as you’re not paying for the energy in the apple, but rather the energy required to produce the apple in the first place.
The current pricing model really is based on how much it cost to produce the good, but that only offers the baseline, not the selling price. The selling price will be found with price discovery of course, but if we can imagine that the "fair" maximum value would be based on how much energy you could get from the product/service, that would definitely help to frame the price range.
This framework can be used for products that give you energy, like an apple, or other things that help you not spend so much energy, like a more effecient hammer for example.
In the end, it's all about how much energy we use, how much we can save, and how much it costs to replenish our "batteries", since no energy equals being dead.
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0 sats \ 0 replies \ @617a7a OP 7 Jun 2022
Yes exactly. There is a problem where people are trying to work out the value of items in bitcoin by converting the price in USD but price ≠ value.
We won’t be able to work out the price as profit margins, discounts etc., will vary even if the good/service is identical. Production cost in energy is really the only thing we can objectively calculate.
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16 sats \ 0 replies \ @xsilentg 7 Jun 2022
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15 sats \ 1 reply \ @zuspotirko 7 Jun 2022
Instead of valuing goods and services in BTC through using the USD price (price ≠ value), which uses the exchange rate, we should value (and so forth price) Bitcoin prices in energy (Joules).
Agreed
You can scientifically calculate the amount of energy (in labour) used to create the good, then use the average energy in joules used to develop a satoshi to calculate the value. [...] For context, a medium apple contains about 395 kJ, or the value equivalent of 59 sats.
Even with your caveat of "price ≠ value" this is arbitrary. Your approaching the whole economy from a very Bitcoin perspective - while any economy is intrinsically a chaotic system and more complicated.
Example: A product can be complicated to produce and expensive with little energy use, another product can be energy intensive to produce but cheap to buy.
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0 sats \ 0 replies \ @617a7a OP 7 Jun 2022
It would include the energy spent designing the manufacturing process and would go back decently far. Difficult to measure however.
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15 sats \ 0 replies \ @uco 7 Jun 2022
Fascinating way to think about satoshis in terms of joules!
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15 sats \ 2 replies \ @bitcorn 7 Jun 2022 freebie
Sounds a lot like Marx's labour theory of value
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0 sats \ 1 reply \ @617a7a OP 7 Jun 2022
Haha, that theory is wrong however, because labour isn’t the only factor in production.
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15 sats \ 0 replies \ @bitcorn 7 Jun 2022 freebie
I don't think value can be determined by production cost. I could spend the rest of my life and energy polishing a turd. That doesn't make the turd valuable. On the other hand, someone might make a piece of art with a canvas, some paint and a day's worth of effort that sells for millions. Clearly not what it cost to produce. Value is subjective and does not exist outside the consciousness that thinks of it.
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11 sats \ 0 replies \ @a 7 Jun 2022
What is the energy required to produce an apple, anyway? This could be a really cool index.
Big Mac energy index, units in sats.
The "real" energy value of goods (priced in sats).
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