Topic: Can someone explain how profit switching pools are beneficial? (Read 471 times)

Well put. Thank you. That makes a lot of sense.

I guess they assume the profitability is due to the difficulty having gone down rather than due to the price having gone up.

Because if it is due to the price going up you are correct that people who already have matured coins on hand to sell can get to the exchange and sell, bringing the price back down, long before any coins miners who start mining at that moment will have matured ready to sell.

But if it is that the difficulty went down, people already holding coins will see no sudden reason to sell since the price has not gone up. But miners will see that if the price does not go down by the time their newly mined coins mature then it will indeed be profitable to mine it. So who-ever mines some first will mature them first so get to the exchange first to be first to dump before miners who didn't quickly notice the difficulty had gone down might not mature theirs until too late.

Of course quick turnaround daytraders will realise that the difficulty going down means the migrant miners will be dumping as soon as their coins mature (or know what other schedule those types of pools use to get to the moment of dumping), so will know the price is likely to be at a momentary peak so will dump to obtain something with which to buy the cheap coins the miners will be dumping. Especially if the miners are blindly auto-selling at market instead of checking the actual profitability that is really in place after their coins have matured and waiting for a better time to sell if it is already too late to catch the profit they and the daytraders both saw would theoretically, if coins didn't take time to mature, be there.

So presumably daytrading bots monitor difficulty much like those pools do...

-MarkM-

I understand that it switches to the most profitable coin but how does it know that its profitable. Let's say the pool starts to mine a certain coin (the most profitable coin). Does that mean that you should sell that coin at that moment because if it still has to mine and it ends up changing to another coin wouldn't the previous coin now be not profitable to sell. So in theory it sounds like whatever coin its currently mining is the coin you should sell/trade if you have and not exactly mine it right? PLease explain because that's kind of how i see it.