🚨 How HIGH can Bitcoin Fly? 🚨 | Fundamental Strategy | Hashpower Academy

Video Transcript:

hello there and welcome to the hash power Academy my name is Jake I’m the lead educator here at the Academy and the topic of today’s video is how high can Bitcoin fly now here at the Academy we teach from a fundamentals first perspective when it comes to bitcoin delving with the energy sector first then going into Bitcoin mining that consumes that energy produces compute power Network hash rate and captures all of those 450 Bitcoin that is distributed in4 44 blocks per day now all of that is important in the context of today’s video looking at price for the reasons of well let me roll it back I used to trade I used to do all of the weird and wonderful build algorithmic systems scripts indices anything that could give me as much information about trading as possible because you want as much information to to make clear decisions and it was only until I got into Bitcoin mining did I truly understand Bitcoin from a price perspective and think of it how many of your friends that trade maybe how many of them actually understand mining not just from a technical side but actually the economics and where the production floor aspects come into this and this is where I want to go with this you’ve got to understand bitcoin’s underlying fundamentals otherwise you’re just you’re going to the supermarket and trading Goods without actually knowing what the farmers are doing with them and how they produce them and the underlying aspects of how the cost basis of Bitcoin can be from electricity not from dollars and so what I’d like to delve into is we’ll go into the upside but you’ve got to First understand this Bitcoin right now has a network average production cost of about $50,000 now this is important for a couple of reasons but we’ll start with this price trades as a supply and demand dollar premium on the consumption side of Bitcoin and if you’re productive and you have access to cheap electricity and computers you can produce at a lower level and as a network average it’s about $5,000 per Bitcoin that miners produce at so that means that they spend $50,000 on electricity that’s their cost and they produce one Bitcoin in this example so spend 50 earn a Bitcoin but with the cost of the machine over time getting paid off now this is important because what if the price of Bitcoin in this example was to drop below production and the miner had the ability to sell the power back to the grid so if he had it at the same price he sells his electricity here back to the Grid or even slightly higher because they contract lower rates so they might be able to even capture a higher price so this means that if the price goes below production the minor isn’t doing the typical Arbitrage of buy energy sell Bitcoin by producing it but the other way round that is to sell the energy and buy the Bitcoin because if price dropped below production if price was 45k and production was 50 he sells the electricity gets his 50k and buys 45k Bitcoin so we could buy slightly more now this is important in the context of this if price is at the same as production that’s a ratio of 100% one: one but if price was 200,000 that ratio of 50 versus the 200k that’s 25% or halfway through uh the 50% and it obviously keeps going up and up and up and the percentage gets smaller so basically what I want to offer as a piece of information is go into theh into the hash power Academy and learn anything and everything you want wants do about all of these layers and we’ll learn about how production cost relative to price is the best decision-making uh percentage even to to buying when price is close to production use this percentage as a multiplier for your your purchase amounts of Bitcoin whether it’s a DCA and when price deviates really high from production uh use a lower percentage and this percentage of the difference between price and production is just a really great decision maker because how low will bitcoin price go well if the price is shut up to here and you’re like should I should I buy at 300 because I think it will pump to 400 I don’t know it’s up to you but I have an understanding and a fundamental knowledge of how low bitcoin price could go but let’s take this example let’s say the price has shot up to 300,000 and production has raised up to well let’s be nice 150k right well now the percentages between the price to production premium is the percentage between 150k production floor and the 300K which brings us back to a 50% and what I’m trying to say is if price as we’ve discussed at the start goes below production well that means that there’s a natural buyer that steps in who sells their power and buys bit coin the producers of the of the network and the easy example for this is when s bankman freed was trying to suppress the price of Bitcoin below $20,000 what he might not have realized is below $20,000 was was the point in which he was trying to push the price below production and a natural buyer steps in the miners the most uh hard hardest Believers in Bitcoin because they don’t buy Bitcoin direct they buy computers that will accumulate it over time so their belief in Bitcoin is so strong that they don’t even buy Bitcoin directly they uh they uh build out the network infrastructure for the for the system instead and yes continually over time both of these Will Change Productions continually CH changing with the amount of hash rate online so the difficulty adjustment is a good metric for you to understand the amount of hash rate and the amount of energy within the Bitcoin Network in fact the three layers I like to refer to it as is Network energy Network hash rate and network Revenue the embodiment of consumption and production with compute in the middle as that that clear uh gauge as to how much compute and and Bitcoin being settled per block because all the different moving Parts if uh the harving comes along the production floor doubles and I actually like to call it uh for the miners the Haring is the doubling because their revenue Cuts in half but there electrical bill stays the same which means their production flaw doubles but for everyone else they’re calling it The harving but yeah to to M as it’s the the doubling so to speak and that production flaw continually increasing alongside price gives you the best percentage difference between as to gauging the value of Bitcoin when the price is close to production really good value really good opportunity to buy because you can buy at the same rate that miners produce with all their millions of dollars of hard Ware compute and infrastructure and how far it deviates away well that’s uh that’s the pre the premium so what you’re doing is you can compare the the reward what you think the upside is versus the risk which is the downside to the production floor so you have a dynamic decision maker of how much risk versus reward that you’re willing to to take and this works um I don’t recommend selling Bitcoin but uh it works the other way around you can understand and is it a good time to sell uh absolutely not if it’s the production floor is it a good time to buy so you could essentially do if you want one minus the percentage price difference between price and production but I’ll I’ll do some more videos on this but the the key gauge here is that everything in the Bitcoin network is moving and price isn’t just the dollar to Bitcoin exchange rate it’s the electricity to Bitcoin exchange rate through Mining and you don’t have to delve into mining but at least learn the economics behind it and this is why we call it the hash power Academy because hash power is that bridge the Wormhole between all of the physical side of Bitcoin and the infrastructure being built and the digital side of blockchain and all the different layers being built on top so I hope this was an interesting video I liked making it and uh I will look forward to the comments section and send this video off to the group chats the trading chats and uh hopefully I’m sure someone will build some uh interesting indicators with this sort of knowledge um I’m sure the smart money is using it and uh I think you guys should too this is also not Financial advice as well I’m going to throw that in there as well so enjoy and I will see you in the next one goodbye