[fastball]

But Bitcoin has appreciated in value, from < $1 to $42,000. In other words, Bitcoin has a market cap of ~$800B, so for Bitcoin as a whole to be "supremely negative sum" as you say, Bitcoin mining hardware would need to have cost > $800B, which seems... unlikely.

[arcticbull]

That's not how market cap works.

Market cap is most recent trade price * supply. It's not a reflection of how much money or value can be withdrawn from the market, that's more a function of market depth.

For instance if I create my own token with a supply of 1,000,000,000 and I sell 1 token to my buddy for $1, I'm, now a "billionaire." That's market cap. Where did that come from, is what you're asking. The answer is, whoever controls the most recent transaction.

However, the total market for my shitcoin is my buddy, and the total amount I can get back out is $1. That's a function of market depth.

[fastball]

Yes and no. I'll admit market cap alone doesn't demonstrate this, but market cap + trade volume does, unless you have reason to believe the majority of transactions are wash trading.

In your example it's $1 between two parties, in Bitcoin's case it was $17B over the last 24hrs between a huge number of parties, which indicates that a significant amount of value can be pulled out of BTC.

How much has been spent on mining hardware?

[robbrown451]

But where did the money come from to create an $800B market cap? It came out of investor's pockets. The early ones might have made more money than they lost, but the later ones lost money.

[fastball]

That's not really how it works either?

If I bought BTC at $50,000 and still own some, I've "lost" money but not actually since I haven't sold it. This is the reality for 100% of owned Bitcoins. There is $800B worth of USD in Bitcoin that has no "loss" side to it because at any given moment they are owned by people who have clearly not sold their share.

When the market cap goes down there is of course loss, but in Bitcoin's 13 year history it has gone from a $0 market cap to an $800B market cap, which means it is massively a net gain for people who have held Bitcoin.

Of course this changes if Bitcoin is revealed as the massive Ponzi scheme that so many HNers say it is / want it to be, but until that actually happens and BTC goes to 0, then as long as the market cap is above the cost of mining hardware it is a net gain for people who have held / continue to hold Bitcoin, not "negative sum". Negative sum would be:

  (market cap - mining hardware) < 0

As pointed out by the other poster it is a bit more complicated than just market cap as market cap can be "gamed", but not really in the case of something with a healthily circulating supply, which is true of BTC at the moment.