Proof of Work Is Our Guarantee For a High Bitcoin Price

We're experiencing quite a bloodbath these days, the crypto prices are plunging ahead of the Chinese new year and the mainstream media's gratuitous FUD doesn't help much either. If you've spent a little time checking out cryptocurrency discussion forums, then you already know that newbies buy into the "end of Bitcoin" propaganda, panic sell and encourage others to do the same.

But those of us who do a little research on our investments already know that the early year crypto crash is a recurring phenomenon (and those who were much wiser have sold their coins before Christmas and now take advantage of the opportunity to buy back in high volumes). But except for the blind trust that the Chinese and the speculators will buy back after February 12th 2018, what kind of guarantee do we have that the price will bounce back to new highs?

Well, it's simple and it's called Proof of Work

That's right, that reward system which hardcore Ethereum fans and concerned environmentalists deem obsolete is the best way for us to know that we're going to get new highs. When Satoshi Nakamoto conceived the mining algorithm (which is key to the decentralization), he/she/they made sure that the participating computers would have to solve mathematical problems that require more processing power and therefore more energy consumption after each block gets discovered. In a nutshell, Bitcoin gets harder and more expensive to mine block by block.

And it is in the miners' best interest to make a good profit: they have paid a lot for the mining rigs and consume enormous amounts of energy on a daily basis.

According to the statistics presented in an article by International Business Times, the average price for mining a bitcoin is around the $7000 value worldwide. Please note that the prices that are about to be presented only take into consideration the cost of electricity and completely neglect other expenses such as mining rigs, rent/deposit fees, employees, taxes, and maintenance.

The highest electricity costs are in South Korea (about $26.170), while the lowest is in Venezuela (about $531). However, due to the authoritarian nature of the Venezuelan government, it's highly unpractical and virtually impossible to move your mining farms into their country. So perhaps that the next good solution is Taiwan, where the electricity cost of one bitcoin is around $1190 - but even in this case, we're speaking about a country which isn't recognized by the United Nations and has strict trade rules.

If you live in the United States, then you should know that mining a bitcoin will cost you $4758. European countries like France and Italy have even higher electric energy costs which drive the process to $7930 and $10310 respectively, and China (where most mining rigs can be found nowadays) has an average cost of $3172. Just so you know, last November John McAfee stated in an interview that the cost of mining one bitcoin exceeds $1000 in electricity - and since it's most likely that his rigs belong to his Chinese friend Jihan Wu, we can assume that the price has tripled in 3 months.

At the current price, miners from almost half of the world are taking losses by running their rigs. And that's the best guarantee that the price will further increase!

So forget about the meaningless FUD and negative news, and remember that some of the biggest financial institutions have a stake in Bitcoin and other cryptocurrencies. The original cryptocurrency is the gold standard of the entire market, so the fate of all altcoins depends on the well-being of their king. Nobody wants to take a loss, there's a lot of money that was taken out in the last month, and it's very likely that the speculators will return and put an end to this massive plunge.

Will the price ever return to low values that barely make Bitcoin a sustainable choice for miners? Yes, it's very likely since this is an unregulated market that the whales use to further enrich themselves. But the best choice you can make is to HODL and buy the dip if you can afford to. Stay smart and informed, don't fall for FUD!

IB Times Article: http://www.ibtimes.com/bitcoin-mining-cost-lowest-venezuela-highest-south-korea-report-finds-2646191