A study back-test for the cost of production proposed to >>>
value the digital currency bitcoin.
Results from both conventional regression (and vector autoregression/VAR) models show that the marginal cost of production plays an important role in explaining bitcoin...
...prices, challenging recent allegations that bitcoins are essentially worthless. Even with markets pricing bitcoin in the thousands of dollars each, the valuation model seems robust. The data show that a price deviation may have begun in the summer of 2017 which is yet to be completely resolved.
The primary ongoing cost for bitcoin production is that of electricity, measured in dollars per kilowatt-hour (kWh). Of course, different regions of the world will consume electricity at their local rates (which may vary by customer type, power generation source, and time of day) and in their local currencies, but for the sake of convenience it is a good working assumption that the average rate of electricity worldwide accounting for both residential and commercial rates is approximately USD USD 0.135 per kWh.
Additional Info: Presently, the block reward is 12.5 BTC per block (as can be seen in the table given above).
One (first) conclusion of the backtest:
There is evidence of increased volatility from approximately September 2017 through January 2018, indicating that the market had deviated from the model (Input costs = Output/BTC-price), but did ultimately converge once again. This spike indicates the emergence and reconciliation of a price bubble, however, even so such bubbles do not indicate a zero value, only that prolonged departures from the modeled price can exist, but which ultimately resolve.
It is important to note that this "short & quick" analysis applies primarily to bitcoin and does not necessarily extend to other cryptocurrencies such as Ethereum or Litecoin (although a similar analysis might). However, with Bitcoin still dominating the digital currency market, both in scale and scope, it is a worthwhile pursuit to understand why it has value.
link (.pdf-download link):