HackerPapers

arXiv:1805.07610econ.EM

Bitcoin price and its marginal cost of production: support for a fundamental value

Adam Hayes

Early discovery. Linked by one identifiable commenter. This paper is outside the main ranking; a mention is not an endorsement.

Abstract

This study back-tests a marginal cost of production model proposed to value the digital currency bitcoin. Results from both conventional regression and vector autoregression (VAR) models show that the marginal cost of production plays an important role in explaining bitcoin prices, challenging recent allegations that bitcoins are essentially worthless. Even with markets pricing bitcoin in the thousands of dollars each, the valuation model seems robust. The data show that a price bubble that began in the Fall of 2017 resolved itself in early 2018, converging with the marginal cost model. This suggests that while bubbles may appear in the bitcoin market, prices will tend to this bound and not collapse to zero.

arXiv comments
Forthcoming in Applied Economics Letters; 2 figures, 1 table
Journal reference
DOI
Subjects
econ.EMEconometrics

On Hacker News

Linked by 1 identifiable commenter in 1 comment across 1 thread, from Nov 2022 to Nov 2022.

Comments linking this paper, per year.

Discussed in comments1 thread

  1. JPMorgan team says crypto markets face ‘cascade’ of margin calls 1 comment

    • It is a poor summary of a commentary piece, but even from that perspective the reader can deduce the model they are using for the purpose of determining a short term floor. Its cited in the piece - Hayes 2018. Bitcoin price and its marginal cost of production: support for a…

      shapefrogView on HNParent context

Submitted to Hacker News

Connected through shared HN threads, not inferred similarity or a recommendation.