Documented history · October 2009

A Price Before There Was a Market

Bitcoin already had rules for transferring coins, but no established market. New Liberty Standard produced the earliest known calculated exchange rate using electricity costs and the output of one computer.

What did it cost to create BTC?

New Liberty Standard published a mining-cost method for calculating an exchange rate. It used annual electricity consumption for a computer running at high CPU load — 1,331.5 kWh — the previous year’s average residential electricity cost in the United States, and the BTC that the operator’s computer had generated during the previous 30 days.

The estimated expense was divided by the number of bitcoin mined. Electricity therefore became the basis of the earliest known calculated BTC exchange rate.

The ratio usually cited for October 5, 2009 is one United States monetary unit for 1,309.03 BTC. Under that calculation, one BTC was approximately 0.00076 of that unit.

This was not yet a market price

The number did not emerge from competing buyers and sellers. One person set it using a personal formula.

The result depended on a particular computer, its mining speed, local electricity rates, and the chosen observation period. Different equipment or energy costs would have produced a different rate.

It is therefore more accurate to call the figure a calculated exchange rate than a market-clearing price. It measured the operator’s production cost, not what independent buyers were broadly willing to pay.

When the calculation met an exchange

On October 12, 2009, Finnish developer Martti Malmi, known in the early community as Sirius, transferred 5,050 BTC to New Liberty Standard.

Malmi received 5.02 United States monetary units through PayPal. Years later he found the record in his email archive and published it together with a link to the transaction.

Malmi said he sold the BTC to help New Liberty Standard start the first bitcoin trading service. A calculated rate was beginning to meet an actual exchange between two people.

What the blockchain preserved

The blockchain contains transaction 7dff938918f07619abd38e4510890396b1cef4fbeca154fb7aafba8843295ea2. It proves that BTC moved, but it does not contain the PayPal record or state the purpose of the transfer.

The connection between the 5,050 BTC and the payment comes from the surviving correspondence and Malmi’s account. The technical record and human testimony complete different parts of the history.

Why the date needs a qualification

The 1 to 1,309.03 BTC ratio is widely associated with October 5, 2009. The original forum post has not survived, while the available archived copy of the New Liberty Standard page was captured later, on December 29, 2009.

The archive confirms the method and displays 2009 rates. Careful history must distinguish the widely accepted publication date, the surviving archive date, and Malmi’s documented October 12 exchange.

From production cost to a market

New Liberty Standard did not discover Bitcoin’s final value. The service proposed a starting point when almost no market existed.

Later, people traded BTC with one another, platforms displayed buy and sell orders, and prices became outcomes of transactions rather than one miner’s formula.

The first rate was imperfect, but it marked a transition: an amount of BTC received a published relationship to costs outside the network.

The first published number was not the market’s answer. It was an attempt to measure cost where almost no market existed.

Historical and educational material. The 1 to 1,309.03 BTC ratio is widely dated to October 5, 2009, but the surviving archive capture was made on December 29; the article states this source limitation explicitly.

Unless stated otherwise, the text, conclusions, structure and editorial arrangement were created by the project editors. Facts, quotations and source materials remain attributable to their authors and rights holders.