Comment by Geee
16 hours ago
No one is producing Bitcoin at loss, because it doesn't make any sense, but it might happen temporarily. Imagine the mining cost as a distribution curve, and bitcoin miners filling the distribution from the cheapest upwards to where the cost equals the revenue, i.e. the highest cost miner is at break-even, so that total of 3.125 (+transaction fees) bitcoin worth of hashrate is produced every 10 minutes. All but the highest cost miner operate at profit.
> No one is producing Bitcoin at loss, because it doesn't make any sense
The cost of producing bitcoin is a combination of the marginal cost (running the miner you already have, i.e. mostly power) and paying for the miner that you bought.
If you buy a miner expecting a certain profitability but then the economics change, you can both end up with a loss long term (never able to recoup the cost of the miner) and still be better off continuing to mine (because the cost of the miner is a sunk cost, and as long as the revenue is larger than the marginal cost of running it, you'll at least recoup some of it).
Both of you are right. There is one more edge case: if you commit to buying electricity in advance it might cost you extra to not consume it. It would still be in your interest to use the power at a net marginal loss rather than not using it and paying a fine for failing the contract.