My original point is that market value cannot be driven entirely by cost of production. This is born out by items that are sold well above production cost, and things that cannot be sold because their high production cost is above what the market will bare. The implication being that saying “bitcoin is worth $X because we spent $X to mine it” is a nonsense statement.

What’s interesting is that you reinforced my point at the very end. Baseball cards are a fantastic example of a product that’s sold in a way that’s completely disassociated from the cost of production.

Except that Bitcoin really is worth $X because someone spent $X to mine it. There is no fundamental valuation: Bitcoin is made up Internet money. It is worth whatever people are willing to pay for it. Mining is public evidence that people all over the world (well, kind of) are burning money to acquire Bitcoin. Maybe those people are cranks, but they do have skin in the game.

No, people are willing to spend $x to mine bitcoin because they can sell it for $x, not the other way around. If I spend 2x as much mining bitcoin, the price doesn’t double. But if the price doubles, I can afford to spend 2x more mining it.

>BTC is no exception: if it costs $1 to make $2 in BTC, you can be sure a lot of people will be 'making' BTC until the cost of making BTC and it's market value start to merge.

Bitcoin is weird though because no matter how many miners there are, it's still minted at the same rate globally. If it cost a miner $1 to make $2 in Bitcoin, what would not happen is new miners joining and flooding the market with more Bitcoins until the price of Bitcoin falls. Instead, new miners would keep joining and the miners would be cutting into each other's profits until it cost them all approximately $2 to make $2 in Bitcoin.

Then you're saying people are acting irrationally or there are other non-marginal costs to consider (i.e. startup costs) in which case you're really saying it's >> $1 to mine a BTC.

But that's not really the point.

Let me put it differently: if it costs $1 to mine $1000 worth of BTC ... then, new miners will flood the market until the cost of mining reaches parity with price. This is not a BTC specific or controversial statement here.

The argument is that in most markets, this parity is reached by bringing the price down. For bitcoin, it is reached by bringing the cost up. More miners means it gets harder to mine, so it costs more.

>For bitcoin, it is reached by bringing the cost up. More miners means it gets harder to mine, so it costs more.

I think this is what you meant, but just to clarify: the cost of mining will go up, not the cost of Bitcoin. (Miners joining or leaving shouldn't directly affect the price of Bitcoin. The same number of Bitcoins exist and get minted regardless of the number or activity of miners, as long as it's nonzero anyway, so miner activity doesn't directly affect the supply and demand of Bitcoin.)