The price of bitcoin is technically determined by supply and demand but the difference with bitcoin is there is other element called hype that doesn’t really exists with stocks like apple or amazon.That means bitcoin can be extremely volatile.So when people hear about it promising they rush into it.so we have seen the huge rush of investors in it lately that has resulted surge growth of bitcoin price. Technically there is no upper limit how high can bitcoin go.But bitcoin is produced through a process called mining and there is a limit as how much bitcoins can be mined. The total number of bitcoin that can be mined is 21million.16.8 million bitcoins has already been mined since it was created. A lot of terms has already been coined like Bubble, Ponzi, tulip and trouble used by crypto-critics over the past year as bitcoin powered from under $1,000 and passes on.
Currently Bitcoin network is paying about 1,750,000 dollars per day for miners – quite a lot of money! Because Bitcoin mining is global and very competitive industry – there is no regulation – nobody is getting big profits. So most of the reward will go to running the business.And of course the biggest cost of mining is the electricity. It has been estimated that even 90-95% of mining costs can go to electricity.
Making more energy efficient mining hardware doesn't help. Efficiency is not the thing that Bitcoin is paying for. Bitcoin is paying for hashes and making hashes requires energy. When you pay for energy consumption, you will get energy consumption.
@pic:bitcoin mining pool china
Let's do a little thought experiment. Current block reward is 1800 btc per day or 657,000 btc per year (we'll forget transaction fees for simplicity). Electricity consumption of the whole world is about 20,000 TWh. Mining happens in countries with cheap electricity, so let's assume it will cost 0,05 $/KWh. And let's assume that 80 % of block reward will go to paying the electricity bill.
If price of bitcoin goes to $50,000, Bitcoin network will consume 526 TWh per year which is 2.63% of the world's electricity consumption. If it goes only $10,000, it's still more than half percent. That is shitload of energy.
If somebody wants to do their own calculations, here is how to do it.
How much of the world's electricity will be consumed by Bitcoin:
price of bitcoin ($/BTC)* block rewards per year (BTC) / (electricity consumption of the world per year (KWh) * price of electricity ($/KWh)) * how much of the block reward is used for electricity * 100
If we assume that price will go to one million per btc:
1,000,000 $/BTC * 657,000 BTC / (20,000 TWh * 0,05 $/KWh) * 0,8 * 100 = 52.56 %
(Yeah, more than half of the world's electricity would go to bitcoin mining. Hard to see that ever happening.)
The longer Bitcoin exists, the more difficult it becomes to “mine,” or create new coins. Without the miners, the Bitcoin network collapses. The cost of getting started as a new miner is so far out of reach for the average person that the main miners are gigantic warehouses in China. In most countries, the cost of electricity to run these computers is actually more than what the digital currency is worth, which makes it pointless to even try.
The longer Bitcoin exists, the longer it takes for these computer systems to process the information. At the time this article was written, the official time for a Bitcoin transfer is “one hour,” but anyone who uses Bitcoin on a regular basis knows that is far from the truth. Transactions can take up to six hours at busy times of the day, because it averages 15 transactions per second. There is no guarantee that it will ever improve. In fact, it is likely to keep getting worse.
@Ripplelogo
In contrast, Ripple’s coin XRP settles 1,500 transactions every second, and they have the technology and infrastructure to make sure that they’ll never slow down. In the digital age, where people want things to happen within a split second, it is simply not realistic to think that as the world slowly begins to understand and use blockchain in their everyday lives, they will choose the slower option, Bitcoin, over currencies that are faster.
Here my friend @heavy has explained about bitcoin crash I bubble theory very effectively.
You can visit his post at
https://steemit.com/cryptocurrency/@heavey/what-happens-when-bitcoin-s-bubble-bursts-part-1
https://steemit.com/cryptocurrency/@heavey/what-happens-when-bitcoin-s-bubble-bursts-part-2