but that is effectively irrational isn't it?

if mining 1 bitcoin costs you 500 dollars and they are sold on the market at 400 why don't you switch off your gear for a while and just buy them ?

Maybe the point is people are merge-mining multiple bitcoins, or the electricity bill for them is way lower than we think it is.

There's also the question of how much of the electricity is paid for. E.g. how many miners are mining on "free" electricity at their parents house, or have access to rack space with "free" electricity (our racks at work come with a certain amount of power, for example; someone putting a Bitcoin mining rig in there would not increase our costs as long as the power doesn't exceed certain limits), or has a miner in a quiet corner at work or similar?

Or any number of other ways of getting free / outright stealing electricity.

maybe they don't have the money to buy them because it's been all spent for mining gear?

Then how can they afford the electricity?

They will earn more coins by paying the electricity and using the already bought mining gear, than if they stop paying for the electricity and use that money to buy coins.

Not if buying the coins is cheaper than mining them, which is what the GP is saying.

that would require a $500 dollar cost of electricity per coin, however in reality the $500 is made up of the investment in the hardware and electricity. You could not just switch off the machine and have $500 to spend on coins, you would need to sell the hardware. of course in most cases selling the hardware for USD and spedning it on BTC will generate more BTC than the hardware will mine.