Difficulty Regression Model (Price)

The Difficulty Regression Model is an estimated all-in-sustaining-cost of production for Bitcoin. It considers Difficulty as the ultimate distillation of mining 'price', accounting for all the mining variables in one number. Thus, the value reflects an estimated average production cost for BTC by the mining industry, without requiring bespoke breakdown of mining equipment, power costs, and other logistical considerations.

The regression model is run between Difficulty, and BTC Market Cap, returns an R2 = 0.944, and is calculated as follows:

Difficulty Regression Price = exp(A + B * log(Difficulty / C)) / Circulating Supply

where A and B are regression constants, and C is an adjustment factor for Difficulty.

• A = 10.2560
• B = 0.5250
• C = 4,294,967,296

Note: This Regression calculation was carried out using daily resolution data up to 14-September 2022. Analysts may wish to revise the regression constants of this regression model on a periodic basis.

Difficulty Multiple

The Difficulty Multiple is a simple oscillator to visualize the distance between spot price, and the Difficulty Regression Model Price. It may be a considered to reflect an oscillator describing Price / Estimated Cost of Production.

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Coined By

Original inspiration by Hans Hague, with idea further developed by Checkmate.

This metric was first featured by Glassnode in The Week On-chain Week 25, 2022 Newsletter.