OPEN-SOURCE SCRIPT
Bitcoin Cost Of Production
Description
This indicator estimates a Bitcoin “Cost Floor” proxy using network difficulty as a substitute for direct energy costs. The goal is not to compute real-world mining costs, but to display a structural cost-pressure baseline derived from on-chain and market data.
The model is intentionally simple and uses two externally fitted parameters (alpha, k).
No fitting is performed inside Pine.
How the model works
The cost proxy is defined as:
Cost Floor = alpha ⋅ Difficulty^k / Issuance
Inputs:
• Difficulty (GLASSNODE:BTC_DIFFICULTY)
• Issuance = Subsidy ⋅ Blocks Mined + Fees_BTC
Parameters (fitted externally in Python):
• alpha: scaling factor to map the proxy into price space (USD).
• k: damping exponent on difficulty. This reduces the sensitivity of the model to long-term technological progress and efficiency gains in mining hardware.
What the indicator displays
• Smoothed Cost Floor (purple)
• Cost Zone (purple zone): Cost × 1.2
• Raw Cost Floor (yellow, optional)
How to use it
This is not a timing tool. It provides a macro context for where price trades relative to a difficulty/issuance-based cost-pressure proxy.
It may be useful for:
• cycle context (stress vs relief regimes)
• comparing price drawdowns against a structural baseline
• studying long-term support behavior during miner stress phases
Important notes
• This indicator does not repaint.
• This script is designed only for INDEX:BTCUSD.
• It does not provide trading signals or financial advice.
This indicator estimates a Bitcoin “Cost Floor” proxy using network difficulty as a substitute for direct energy costs. The goal is not to compute real-world mining costs, but to display a structural cost-pressure baseline derived from on-chain and market data.
The model is intentionally simple and uses two externally fitted parameters (alpha, k).
No fitting is performed inside Pine.
How the model works
The cost proxy is defined as:
Cost Floor = alpha ⋅ Difficulty^k / Issuance
Inputs:
• Difficulty (GLASSNODE:BTC_DIFFICULTY)
• Issuance = Subsidy ⋅ Blocks Mined + Fees_BTC
Parameters (fitted externally in Python):
• alpha: scaling factor to map the proxy into price space (USD).
• k: damping exponent on difficulty. This reduces the sensitivity of the model to long-term technological progress and efficiency gains in mining hardware.
What the indicator displays
• Smoothed Cost Floor (purple)
• Cost Zone (purple zone): Cost × 1.2
• Raw Cost Floor (yellow, optional)
How to use it
This is not a timing tool. It provides a macro context for where price trades relative to a difficulty/issuance-based cost-pressure proxy.
It may be useful for:
• cycle context (stress vs relief regimes)
• comparing price drawdowns against a structural baseline
• studying long-term support behavior during miner stress phases
Important notes
• This indicator does not repaint.
• This script is designed only for INDEX:BTCUSD.
• It does not provide trading signals or financial advice.
Script de código abierto
Fiel al espíritu de TradingView, el creador de este script lo ha convertido en código abierto, para que los traders puedan revisar y verificar su funcionalidad. ¡Enhorabuena al autor! Aunque puede utilizarlo de forma gratuita, recuerde que la republicación del código está sujeta a nuestras Normas internas.
Exención de responsabilidad
La información y las publicaciones no constituyen, ni deben considerarse como asesoramiento o recomendaciones financieras, de inversión, de trading o de otro tipo proporcionadas o respaldadas por TradingView. Más información en Condiciones de uso.
Script de código abierto
Fiel al espíritu de TradingView, el creador de este script lo ha convertido en código abierto, para que los traders puedan revisar y verificar su funcionalidad. ¡Enhorabuena al autor! Aunque puede utilizarlo de forma gratuita, recuerde que la republicación del código está sujeta a nuestras Normas internas.
Exención de responsabilidad
La información y las publicaciones no constituyen, ni deben considerarse como asesoramiento o recomendaciones financieras, de inversión, de trading o de otro tipo proporcionadas o respaldadas por TradingView. Más información en Condiciones de uso.