Crypto as a Commodity.
A value investor's take on it.
As of writing this BTC is at 60.8k. Conceptions of value and price are often tied to the production cost of things. Bitcoin does have a cost to mine. Electricity is not free, GPU depreciation is real. In comparison to gold or silver, BTC looks quite different but deep down this connection between value as the cost of production is important as it tells us where the price floor is. Nobody wants to sell something cheaper than what it cost to make unless it’s for charity or something. Anyway, let’s find out what is the cost to mine.
Methodology
There is a handful of companies listed that report quarterly. Not all of them have been around the same time. As time progresses, the estimated cost to mine improves. Additionally, the values will be weighted by the amount of bitcoin mined by each of these companies. CLSK, GREE, IREN, LMFA, RIOT, WULF were selected due to their explicit sections regarding cost to mine.
Really helpful here. Additionally, filings for these companies and their cost may vary quite widely as energy costs can vary due to inclement weather allowing some interesting values to show up additional GPU deprecation can swing the numbers widely. In 2026 the cost to mine one bitcoin for WULF was at a slight loss since depreciation was going to be used against the cost to mine. In their filing:
“Cost to mine one bitcoin” is a cash cost metric and does not include depreciation. Although the Company recognizes depreciation with respect to its mining assets, it does not consider depreciation in determining whether it is economical to operate its mining equipment. As a result, the Company does not consider the sunk costs or depreciation of past capital investments in its historical or forecasted breakeven analysis. If depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $79,845 and $37,316 for the three months ended March 31, 2026 and 2025 respectively, bringing the total “cost to mine one bitcoin” to $79,464 and $103,472 for the three months ended March 31, 2026 and 2025, respectively.1
After using a quarter by quarter, bitcoin weighted average price to mine across companies that report between 2023 and 2026 we get the following chart.
While the cost of mining bitcoin could go down (thus further exacerbating the move down so far), the ratio between the two is interesting enough to consider opening a position as the cost of mining bitcoin (at least according to these companies) is approximately the same price as it is going for. This is like buying a burger at the cost or near cost of what it takes to make it. All other prices above it is just a markup for the total cost of the thing to generate profit. In the case of Bitcoin the present cost to mine per BTC is around 45K, I will happily take the fair price when it gets there.
Data here.
You can apply this way of reasoning to other commodities. Gold and silver come to mind. Really any commodity. Anyway, that’s all. If this made you think differently, consider subscribing.
https://www.sec.gov/Archives/edgar/data/1083301/000108330126000092/wulf-20260331.htm