Topic: Bitcoin price vs. hash rate? - page 3. (Read 12085 times)

Well there is a good side to that. If the number of USD in circulation rises exponentially, the exchange rate of FIAT/BTC will also rise exponentially and nothing can stop it. BTC in that sence is a good hedge vs retarded central bankers.

Haha yes, but the paraphrase is true only if one thinks Bitcoin is a Ponzi scheme.

The bad part about ponzi schemes is that there is no utility behind them, this makes their worth only proportional to their market growth and failure is inevitable because of this.

Bitcoin does offer quite the utility, it having solved the problem of a distributed trustless transaction system. It works well, sure it's a little raw at the moment, in the end users won't be seeing key strings etc. (unless they want to).

The irony is that Bitcoins nemesis: fiat and fractional banking IS a ponzi scheme as "new" money is created at a rate of 10:1 on new debts that are taken out by users Talk about untennable and destined to fail

are you sure its not the other way around?

the higher the diff, the bigger the price.
its like that with all coins.

"Miners have effect of price, because they are the great ponzi followers."

Less people mining, lower difficulty.

I think it is simple and great, self regulating system.

Difficult goes down. That's why this system is so good and self stabilizing.

No
Difficulty falls and new miners get to enjoy producing BTC.

I guess twin is assuming that those who buy with btc would have otherwise held btc for capital gain and when he says "profit" he means comparison between the long btc position and btc flows from mining.

I am not sure it is true that this has never happened. Anyone who buys hardware when btc is high before a fall and mines when hash rates are declining but has good enough hardware to mine more btc than it costs to pay for electricity will make a btc profit over and above a btc long position. This as happened at least once in bitcoin history (after the fall in prices from the first gox hack).

Granted it is a very specific set of circumstances.

Hashrate follows price as you say yes.

But hashrate will have some effect on future price.

It is in the interests of miners to have higher coin prices. Miners are not just black boxes, they are also people, enough people can and will influence a market price through different means. For example spreading optimism about bitcoin, holding out for higher price on exchange etc.

Higher hashrate (provided it remains distributed) increases the network security which can only add worth.

A larger network computing power might impress new users. New user thinking "45 petahashes! wow this bitcoin must be serious stuff".

What you wrote makes my brain hurt.

Rising BTC prices hedge risk and improve profits when investing in mining hardware.  It DOESN'T factor at all in if you are making/losing BTC directly by mining.

Your comments make NO sense.

"Investing" in mining hardware with FIAT or BTC is exactly the same thing except for any fee difference  in the transaction with one or the other.  If anyone says different they are fooling themselves.

If I have a $1000 today... I can buy BTC or I can buy a mining rig (whether that is in USD or BTC only matters in fees).  A mining rig is technically only profitable if it mines more BTC then its purchase price (in BTC) was.  Sure rising prices can mitigate the risk of mining by allowing a USD profit... but that profit would still be lower then if you just bought BTC thus just a hedge against loss.

People make BTC profit from mining all the time... if they didn't there wouldn't be pentahashes added almost daily.   Yes right now ASICs and business's are squeezing most profits out of mining but it does occur.


To the OP:  Hash probably lags price a bit since it is reactionary and takes time to order/setup mining rigs etc (and to take them down).  It also will be less and less of a factor as mined BTC become less and less a % of available coin.

Not really, efficency will continue to rise and if the price keeps his longterm upwards trend, then the money invested in hardware will not decline any time soon (if ever!)

I had to idea how much hashrate is related to price. But won't it change in future ?

When the market is up, everybody is optimistic. When the market is down, two distinct groups of people form: pessimists (everything goes to zero) and optimists (everything will skyrocket). Neither one can predict the future, but copes with the stress of the down market by reacting the way they always react when things are bad.

Personally, I'm very optimistic and I'm in for the long haul.

The people that keep mining when BTC rates are low are the ones who don't immediately sell their mined coins for USD right away. They HODL them because they believe in a bright future. Even if the current BTC rates are not profitable, they believe that some day in near future the prices will go significantly higher and what does not look a viable investment right now will look much more sensible at that time.

Thinking about it there really was no time when hashing was worth more than price since well it started trading in 2010 and before that whoever was mining was just paying electricity lol

• There is a corellation between hashrate and price.
  
• Hashrate has not any influence on bitcoin price. Hashrate always starts growing after price goes up (see the chart below).
  
• Bitcoin price has influence on hashrate. Hashrate is always growing up until mining cost hits bitcoin price.
  

Do not try to predict bitcoin price by watching its mining difficulty, it's useless.



(but if you don't care, welcome)

exactely. I don't think we are anywhere near a alltime high. Before 2018 we will hit 5 digits. All fundamental analysis says that.

Damn! I never knew that, but yes it makes sense.

If only a quick time-trip to 2010 was possible. Buy 1000 BTC and cold wallet them on an engraved stainless steel sheet, bury it and time travel back.

Well I suppose we can pretend we are time travelling back from 2018.

Scratch that!

It is BETTER to invest into hardware at HIGH prices COMPARED to low prices. Still not good though !!!