Discussion on Bitcoin Mining Costs and PoS Public Chain Economic Models

Recently, the price of Bitcoin briefly fell below $54,000, reaching the shutdown price for some mining machines. Data shows that when the price of Bitcoin is at $54,000, only ASIC mining machines with an efficiency of over 23W/T can be profitable, with only 5 models of mining machines able to maintain operations. This means that some miners with weaker risk resistance may choose to exit to stop losses, triggering the phenomenon of "miner capitulation."

How is the cost price of Bitcoin mining, that is, the shutdown price, calculated? This requires us to first understand the economic model of Bitcoin and the PoW mechanism. The total supply of Bitcoin is fixed at 21 million coins, with approximately one block generated every 10 minutes, rewarding miners with a certain number of Bitcoins. Initially, each block rewarded 50 Bitcoins, and then it halves approximately every 210,000 blocks ( about every 4 years ). After the most recent halving on April 23, 2024, the block reward was reduced to 3.125 Bitcoins. In addition, miners can also earn revenue from transaction fees.

In the Bitcoin network, miners select transactions from the memory pool to form new blocks and compete for the right to record transactions by constantly calculating hash values. The network difficulty adjusts approximately every two weeks, or every 2016 blocks, to maintain a block time of 10 minutes. Currently, the total network hash rate is about 630 EH/s, and the theoretical daily output for each T of hash rate is about 8*10^(-7) Bitcoins.

Taking the Antminer S19 Pro as an example, with a rated hash rate of 110T and power consumption of 3250W, the daily power consumption per T of hash rate is 0.709 kW. Based on a rate of $0.055 per kWh, the cost of mining one Bitcoin is approximately $50,000. However, this cost will fluctuate with changes in the overall network hash rate.

In PoS public chains like Ethereum and Solana (, the economic model is different. Under the PoS mechanism, nodes participating in the consensus must stake a certain amount of platform tokens, referred to as validators. The platform incentivizes validators to maintain network stability by issuing token rewards.

After Ethereum transitioned to PoS in September 2022, the annual issuance was about 3.01 million ETH, with an inflation rate of about 2.5%. However, due to the EIP-1559 burning mechanism, ETH is actually in a deflationary state most of the time, with an average deflation rate of 1.4%. To become an Ethereum validator, one must stake 32 ETH, and currently, the staked ETH in the network accounts for about 27% of the total supply.

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The initial inflation rate of Solana is 8%, decreasing by 15% each year, with a long-term inflation rate of 1.5%. Solana has no minimum staking requirements for validators and supports delegated staking. Currently, there are 1,500 validator nodes, with an average annualized return of about 7%.

Compared to PoW public chains, the economic model design of PoS public chains is more complex, requiring consideration of multiple aspects such as staking mechanisms, incentive mechanisms, inflation parameters, and token functions. Most new public chains choose the PoS mechanism mainly because it is more energy-efficient, has better performance, and higher security. However, PoS also faces potential issues of wealth concentration, as the largest stakeholders often receive the most rewards.

Overall, the economic model is the core design for the long-term operation of blockchain and is crucial for its sustainable development. Different public chains adopt unique economic models based on their characteristics and goals to balance network security, token value, and user participation.

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