Topic: Bitcoin price will be deflated!!! by block halving!!!!! (Read 2709 times)

It seems that you are distinguishing between mining pools and mining farms. No problem. But in this case the mining farms you are talking about are massively irrelevant to the question discussed, since 1) we (you and me) are talking about miners (not just farms or pools), and 2) they (farms) don't supply even a few percentages of the mined coins (as you separate them from pools). Thereby you volens-nolens confirm that miners (which are mostly pools in terms of new coinage) don't need to sell (a large portion of) their coins (as you said yourself)...

Quod erat demonstrandum

You are deflecting. Business model of mining pools and mining farms are very different. Initial investment of a pool is so much lower than mining farms. Pools do not need to sell a large portion of mined coins to replenish initial investment (to break-even) while mining farms do.

Edit (Responding to the comment below):
That is what I was thinking, mining pools are not very relevant to the discussion. Why did you bring it up in the first place??

If you have problems with proper understanding, I can explain it to you. "They can't be selling everything" means that some of them (or just one) don't sell all the coins they mine. In other words, that some newly mined coins won't be sold. If I wanted to say what you are trying to ascribe to me, I would have said "None of them can be selling everything". But nevertheless, show me here a mining pool which was not "built months or years ago" that would have a significant share of hashing power...

Or just any new mining pool that would be of relevance, for that matter

You don't seem to think things through before you reply.

Not all mining farms are built months or years ago, newer farms may not have reached break-even point. You have said so yourself, "once they hit break-even". How about before the "once"? Before the farm break-even, owners could sell all their mined coins. There are many farms out there built at different times. Yet, you seem to believe each and every one of these farms "can't be selling everything (bitcoin)".

I am serious with "Backup generators". I have seen photos from here of Chinese mining facilities with backup generators.

They would need twice the price and need it fast at that (to keep their profits unscathed). Given that they are not the only ones who are supplying coins to the market, this is not possible just because their supply of coins is halved...

if we take as an example gold or diamonds, are their price deflates when less gold or diamonds reach the market? NO

why will it happen with bitcoin then? we can see this every time that happens with an alt coin, take as example what happened with LTC few time ago. IMHO i don't think that price will be deflated quite the opposite, bitcoin price will grow and will bring to miners what they need to continue mining, a high price for bitcoin.

I'm singularly curious if you argue just for the sake of argument. Once the Bitcoin halving occurs, miners will get half as much what they earned before the halving. If their profit margins are not high enough to cover their operating expenses with twice as less (yeah) revenue, they will bear losses and will have to cease mining. But if, nevertheless, their profit margins are high (and they already got back their capital expenditures), then they don't need to sell all their coins in the first place...

You are granted an opportunity to choose where exactly you fail

Backup generators, lol. You don't even see that your post is self-contradictory (this part, and especially the next part). Miners mine for profit (I guess this won't be a matter of dispute). That means once they hit break-even they don't need to sell all their newly minted coins but only a fraction to compensate for operating costs...

I guess you have to decide for yourself whether miners earn profits or not. If they do, they don't need to sell all their mined coins

I can't agree with that. Mining farms are built with fiat. That includes building costs, hardware purchases, and backup generators. The infrastructure could be financed with loans. Loans have to be repaid, or owners may want to sell mined bitcoin to offset initial investments until the fiat breakeven point.


They will not suffer losses once the mining farm is operational. As long as the farm is mining, I can safely say that mined coins will always cover operating costs. Contribution to invested capital will be slower after the halving, but it is still profitable to continue mining.

As I think bit coin price will rise after reward get halved. If miners even can't get the money they invested in mining then they won't mine bit coin and if they do they try to sell it in higher prices than the present price. You may say the other traders who are holding will sell it in normal price but I think after they see lots of selling bid at higher price they also like to get that price for their bit coin. Thus I will store bit coin to enjoy that rise in bit coin price. I am not a expert and this is my personal view.

I don't think price will go down because of halving but I am sure we won't see the big hype as we seen in 2013 after halving

Honestly, I don't know and don't want to speculate. I say only what I actually consider as possible, to the extent that I take measures to prevent losses and earn some profits by this, if it ever comes to that...

I also deem it possible that the halving will really be changed

Great article.  It's convincing and I agree with most of the points.  One thing it unfortunately doesn't address is the XT versus core debate and how that will affect everything.  I'm worried about that and it's a big issue.

Check out this article...

http://wallstreettechnologist.com/2015/08/19/bitcoin-xt-vs-core-blocksize-limit-the-schism-that-divides-us-all/

Yikes.. that pessimistic view is a very dire one.

Let's say that were to happen, how much of the bitcoin community will completely fall off in your opinion? I think if bitcoins price were to drop to $50 and the debate of block size still rages on, I would think probably at least over 25% of the community would sell all of their bitcoins, mining hardware, etc. and just move on...

But at the same time I could see that some people would want to stay in the game and hope that the core dev team can implement something which would ease the blocksize debate and give miners more reason to mine even harder... These next couple years are going to be absolutely ridiculous to watch bitcoin prices fall and rise.  Personally I would just be happy if the price would stay at $230 lol.

I have two scenarios (provided that Bitcoin halving is not canceled or otherwise meddled with, of course). The first (let's call it an optimistic one, lol) assumes that nothing substantial changes in the long run after the halving (beyond the usual short-lived paroxysms of pumps&dumps), the second (a pessimistic one, wtf) assumes that miners actually begin suffering heavy losses, mining is paralyzed (until the difficulty drops a few times), panic sell sets in (started by miners liquidating their stashes and jobs), price collapses to below $100 and levels off at about 50 dollars per coin...

OK, cool. How do you think the price will behave between now and 2017? What role do you think that the halving will play during that time?

Under production I mean the number of new blocks found per unit of time

Nevertheless, now I see your point, though I still find it misguided at best. Miners will produce only half the amount of bitcoins after the halving, but this doesn't in the least mean that the total supply of coins will diminish accordingly since they don't sell all their coins even now (when reward is high), and they are not the only ones who sell bitcoins. Given that a) they can't increase production (i.e. the number of new blocks found per unit of time, which could potentially offset the drop in reward), and b) they may actually begin suffering losses due to lower reward per block (I don't expect their profit margins to be high due to tight competition), I see it as mostly inevitable that they will have to sell more coins than they sold before the halving (i.e. now sell), in order to cover their expenses (which remain the same per block)...

In short, it is not as linear as you think it is

OK, we have a misunderstanding based on semantics. Revenue is the money they make. Production is what they make in order to sell and make money. You're confusing production as in "how much they produce" with production as in "how many resources are put into producing bitcoin". Assuming that their efforts at producing bitcoin (time, hardware, maintenance, etc) does not change, what will drop first is how many bitcoin they produce, it will drop 50%. Then their revenue (the money they make) will be affected by what they do with their reduced reward.
What makes more sense for them is to raise the price they sell at, because what they have to sell is a lesser amount, despite the fact that the cost of producing what they sell remains the same.

So the amount of bitcoins produced (production) is reduced by 50% first, and their revenue is affected in some manner, one which I am not comfortable speculating upon.

Why do you continue to persist when it is evident that it is their revenue that would fall first? Not until then miners have any reason to cut production (effort and time wise), since that would mean losing profits. They don't care so much about the amount of coins they produce per block as about the revenue they get per same block...

Firstly, I don't see what bitcoin miners are producing other than bitcoin. Heat, perhaps? Bitcoin can be part of their revenue, but it is their production of it that pays their bills. Let's get this in order: first, their production (they are producing bitcoin and heat, nothing more) drops by 50% on the bitcoin front. Then their revenue is reduced if they keep selling the bitcoin at pre-halving prices (if the halving has not already been priced in, as I think was the case when bitcoin was selling at about $12).
Supply and demand. Supply will be reduced 50%, their demand will possibly increase, probably stay the same... unless something really bad happens, I don't see Bitcoin's price trading at below [insert the double of Jan 2016 price here] March 2017. My point is that I believe that bitcoin will follow a similar patter of a leap in price before the halving, followed by a crash, then a rise again (trading at some prices for one last time).
Litecoin has replicated this pattern, a pre-halving pump to about $8, followed by a dump all the way down to $3. It's remained under $3 afterwards, but I'm confident it's traded for under $2 for the last time.
Here's what I think will happen. We'll start 2016 at about $300, there will be a pre-halving pump all the way back to $600, then back down to $400. Afterwards, the price will change in some manner (ether stable or not), until we reach $700-$900 by march 2017. And that price will be the new norm.