Dear Vikram,

You wrote that “At face value, they are the cost (minus the initial cost of the equipment, since that should be negligible over time) to produce a singular coin.”

However given that (i) historically over the last couple of years mining equipment efficiency increased rapidly and (ii) even more importantly with a growing hashrate and increasing difficulty, equipment (i.e. hashpower) loses value per hash rapidly — the equipment cost should be factored in as a part of total cost of production much like the Gold All In Sustainable Cost calculation as I’ve indicated on my post https://medium.com/@hotabak/gold-and-btc-cost-analysis-bitcoin-in-gold-terms-would-be-substantially-higher-in-price-than-9e44f43a55d6.

Furthermore, facility costs such as cooling and security should also be factored in. I was an investor in datacenter and such costs alongside basic equipment and electricity constitute an important part especially at a small to mid scale opereation.

Even more importantly labor costs, business risk factors, administrative costs and such other costs should also be factored in. My general calculation is that the equipment and these non electricty costs would total more than electricity thus reducing the multiple significantly.

Finally as you’ve pointed out to the Venezuella example, a low cost electricity does ot mean production viability or security. A facility in Georgia is different from a facility in China and both are very different from a facility in Iceland in business sense. So the multiple inherently warrants a correction factor depending on the production location.

In conclusion, I think the actual cost to produce would a Bitcoin is significantly higher than USD 1,765 — 2,824 range with all these factored in on average.