fatbear on Nostr: How do you actually price oil/energy in #Bitcoin? We've heard many Bitcoiners talk ...
How do you actually price oil/energy in #Bitcoin?
We've heard many Bitcoiners talk about pricing oil/energy in BTC. But what does that actually mean?
One options just do a simple conversion of the USD price of to BTC using current exchange rate.
For example the current price per barrel of WTI oil is ~$75, converted to ~107,143 sats per barrel.
But this isn't pricing oil in BTC terms, just accepting #bitcoin for payment.
What happens if we use the opportunity cost of mining bitcoin instead? Warning, assumptions ahead - this is a thought experiment I found interesting and incorrect?
Assumptions:
- 1 Barrel of Oil contains ~1,700 kWH of usable electricity
- Using Bitmain S21. 200TH/s @ 3500 W
One day of running the S21 is 3.5kWh * 24 = 84kW. This lets us run the S21 for ~20.22 days (1,700/84), let's call it 20 days.
Using a mining income calculator our daily income is estimated at ~36,000 sats. (I know I know, assumptions bro)
20 days * 36,000 sats = 720,000sats.
My crude calculations (see the pun?) indicate one barrel of oil should be priced at 720,000 sats (~$500USD) at current block rewards/difficulty.
Energy producers are being screwed by selling oil for USD instead of using it to mine Bitcoin themselves.
Published at
2024-03-10 11:53:57Event JSON
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"content": "How do you actually price oil/energy in #Bitcoin? \n\nWe've heard many Bitcoiners talk about pricing oil/energy in BTC. But what does that actually mean? \n\nOne options just do a simple conversion of the USD price of to BTC using current exchange rate.\n\n For example the current price per barrel of WTI oil is ~$75, converted to ~107,143 sats per barrel. \n\nBut this isn't pricing oil in BTC terms, just accepting #bitcoin for payment.\n\nWhat happens if we use the opportunity cost of mining bitcoin instead? Warning, assumptions ahead - this is a thought experiment I found interesting and incorrect?\n \nAssumptions: \n- 1 Barrel of Oil contains ~1,700 kWH of usable electricity\n- Using Bitmain S21. 200TH/s @ 3500 W\n\nOne day of running the S21 is 3.5kWh * 24 = 84kW. This lets us run the S21 for ~20.22 days (1,700/84), let's call it 20 days.\n\nUsing a mining income calculator our daily income is estimated at ~36,000 sats. (I know I know, assumptions bro)\n\n20 days * 36,000 sats = 720,000sats.\n\nMy crude calculations (see the pun?) indicate one barrel of oil should be priced at 720,000 sats (~$500USD) at current block rewards/difficulty. \n\nEnergy producers are being screwed by selling oil for USD instead of using it to mine Bitcoin themselves.",
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