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Comment by Scaevolus | Hacker News Reader

More than just power, you have depreciating assets (mining chips, servers, buildings) that are effectively losing money constantly. Operating them at a small loss is better than leaving them idle for a huge loss.

You see similar economics when farmers sell crops at a net loss.

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This is only relevant if your clearing bit coins above the cost of the electricity. If not, you’re losing more turning them on than off.

In economic terms, suppliers will continue producing so long as the sale price is greater the marginal cost of production. The average cost is irrelevant in the short run because it includes sunk costs.

The comment you were responding to was about electricity, which is clearly a highly linearly correlated marginal cost. I am not sure why you're bringing up average costs at all.

And the comment you replied to did not even mention the other marginal costs that Bitcoin faces (employee costs, land rental, networking costs, etc).

I was restating what they were getting at in a way that could be easily traced back to widely studied economic theories. It was an elaboration, not a disagreement.

Note: Farming in that manner regularly is not sustainable. Also, at a certain loss point, you might as well compost the crop back into the soil to contribute to next year's crop as fertilizer. That stuff is expensive.

Hell, the entire economy makes no guarantees at being sustainable in the long run. The unsustainability period just shows all indications of being longer than a human lifespan, thereby making it easy for people to write off as not their problem.

So slightly negative margins but making it up in volume?

Think of it more as cutting your losses. You've already lost the money, so even if you can't make it all back you can make back part of it by selling the product at a loss.

That's how you lock up your Series A. For the next round of funding you'll need to upgrade to "large negative margins but hockey stick volume". The Saudi Sovereign Wealth Fund will accept nothing less.

No, it's positive margins offseting negative fixed costs.

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