Dead cat bounce - page 2. | Bitcointalksearch.org

Nagle

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Quote from: malevolent on September 26, 2011, 04:01:20 PM

wouldn't you expect the difficulty go down? It's no longer profitable to invest in new mining rigs, moreover, many people are scarcely making any profit with such low exchange rates.

Mining peaked at the end of July 2011.

The difficulty is declining, trailing the decline in mining by about two weeks.

The mining peak trailed the price peak by about 6-8 weeks. The mining curve overall looks like the price curve, but delayed 6-8 weeks. That's an indication of how long miners will keep working once mining becomes unprofitable.

BubbleBoy

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Quote

The implicit goal when someone talks about rationality in this forum is fiscal acquisition, but that is a bit silly. There are people who are going to mine bitcoin even if the exchange rate is 1c/BTC, because they like the idea.

Do those people derive an utility proportional to the amount of BTC mined ? Are they willing to dump thousands of dollars into mining equipment that does not recover it's cost, as opposed to some casual CPU mining ? Are they capable of covering this financial loss for a long period of time ? Do their wives agree ? Sure, hobby mining at a loss might continue, but I'd say it's has a negligible contribution to the difficulty.

Quote from: Jixtreme

and just because the incremental bump to their energy bill is not offset by the current price of BTC doesn't mean they won't eventually turn a profit. What really matters is ROI.

When the revenue drops bellow the energy bill you must stop mining immediately. There's no point in buying overpriced bitcoins via your energy bill when you can buy them cheaper on the market. If you would eventually turn a profit by continuing mining, you stand to gain even more by stopping mining and buying coins on the market (because you can buy more for the same money spent on electricity; or buy the same amount as you would have mined, and pocket the dollar difference).

Profits from predicting the future price of bitcoins are speculative, the revenue for mining is simple arithmetic. Can't believe people still fail at this after the topic has been talked to death in hundreds of threads.

worldinacoin

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Bitcoin isn't too stable but so is everything else including the USD, in fact nowadays, nothing is stable.

Bigpiggy01

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Quote

Short term losses are offset by recovered in future profits. Wise miners won't quit until there's no hope of ever recovering their investment.

Or just by doing a bit of trading Grin

Jixtreme

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People who believe they will have the opportunity to sell once again at higher prices wouldn't - nor shouldn't - stop mining. Most miners aren't living paycheck-to-paycheck, and just because the incremental bump to their energy bill is not offset by the current price of BTC doesn't mean they won't eventually turn a profit. What really matters is ROI.

Short term losses are offset by recovered in future profits. Wise miners won't quit until there's no hope of ever recovering their investment.

-Jix

teukon

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Quote from: old_engineer on September 27, 2011, 08:48:45 AM

I think the high volatility is the primary obstacle to the wider adoption of bitcoin, and the primary reason I speculate is to help reduce exchange volatility. I'm happiest when I see that one of my buy or sell orders was partially filled before the market switched directions, meaning that I "shaved the peak", so to speak, off the market rally or the drop.

Boring though it may be, I hope the market stagnates between $4.80 and $5.20 for the next few weeks to months, and allows developers and users to get a taste of price stability.

Excellent work. I do hope more traders can keep shaving off these peaks and predicting this market successfully. The volatility scares too many potential users off. I'm often trying to send money to someone and asking if they accept Bitcoins. In only four cases in the last few months have I had a positive answer from people that would otherwise not be involved in Bitcoin at all.

If the market were much more stable then more people would be willing to start accepting Bitcoin and I'd have a much easier time with payments and donations (Transaction fees and comission (GBP -> USD) are not fun when all you want to do is donate). People who get into the Bitcoin market and trade purely for profit are doing Bitcoin a great service (provided of course that they are successful) and they have my thanks.

grondilu

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I witnessed a dead cat bouncing once. Quite impressive. I didn't even know this english expression at that time and I thought it was surnatural or something. I think I saw it bouncing on the road at least ten times. I thought it would go on forever and I actually didn't see it stop as I had to leave the place.

old_engineer

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I think the high volatility is the primary obstacle to the wider adoption of bitcoin, and the primary reason I speculate is to help reduce exchange volatility. I'm happiest when I see that one of my buy or sell orders was partially filled before the market switched directions, meaning that I "shaved the peak", so to speak, off the market rally or the drop.

Boring though it may be, I hope the market stagnates between $4.80 and $5.20 for the next few weeks to months, and allows developers and users to get a taste of price stability.

fivebells

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Yes, people keep talking about rational actors, but you can't think sensibly about rationality until you've pinned down the goals. The implicit goal when someone talks about rationality in this forum is fiscal acquisition, but that is a bit silly. There are people who are going to mine bitcoin even if the exchange rate is 1c/BTC, because they like the idea. On the other hand, such people are less likely to dump all the BTC they mine into an exchange for fiat currency.

old_engineer

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Quote from: BitMagic on September 26, 2011, 09:31:20 PM

In other words, it doesn't make sense to mine if you are losing money doing it.

Sorry, BitMagic, but it looks like today is your day to be the idiot. There are many reasons to participate in the experiment called BitCoin besides making money, and these alternate reasons are perfectly valid and make sense. Just because it doesn't make sense TO YOU with YOUR value system and needs RIGHT NOW, doesn't mean it doesn't make sense to others.

In fact, for most of bitcoin's existence, mining has not been immediately profitable, and the past few months are an anomaly. I don't know how you can be here and not have noticed that bitcoin was primarily designed to facilitate freedom and privacy in financial matters, not as a way to make money by mining. Ironically, it's because of the early miners that mined when it didn't "make sense" that you are now here, loudly advertising your ignorance by saying it doesn't make sense to mine if you can't make an immediate profit. I give away money all the time, and I suppose that doesn't make sense to you, either: it's called donating.

If all you want to do is safely invest USD with a guaranteed short-term return, go buy a treasury bond, and stop using 15 point bold font to annoy us with your myopic viewpoints.

BubbleBoy

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Quote from: BitMagic on September 26, 2011, 09:31:20 PM

Quote from: malevolent on September 26, 2011, 04:01:20 PM

It's no longer profitable to invest in new mining rigs. [Under this assumption], why isn't mining stopping?

And my response:

Quote from: BitMagic on September 26, 2011, 04:40:37 PM

If things stay the same, it will.

In other words, it doesn't make sense to mine if you are losing money doing it.

Everybody here agrees that a new GPU mining rig is a bad investment. However most people are not loosing money on the short run, they are making electricity and something extra - just read my numeric examples. This is the complete quote of the OP, the important part bolded for your reading pleasure:

Quote

It's no longer profitable to invest in new mining rigs, moreover, many people are scarcely making any profit with such low exchange rates.

The fact of the matter is they are still making profit (in the EBIDTA sense), low as it may be, and as long as this continue they can't stop mining(*). Some of them are still underwater because the unamortised initial hardware costs, but that's rather irrelevant - they continue mining to minimize the total loss.

(*) Truth be told, this analysis is incomplete if you don't factor the opportunity cost of liquidating your setup and selling the hardware on eBay. The decision to do that may or may not make sense depending on your personal present value of cash money and the anticipated resell value of hardware. Anyway, if you decide to liquidate you should do it sooner rather than later, and maybe sell it to some other sucker who wants to get in the mining game (sort of like the GPU ponzi scheme). My psychic powers predict a huge glut of graphic cards hitting eBay in about 6 months time - that's what under 1$ prices or ASICs or both can do.

evoorhees

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Democracy is the original 51% attack

BitMagic - stop being a douche. lol

cbeast

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Let's talk governance, lipstick, and pigs.

Quote from: BitMagic on September 26, 2011, 09:31:20 PM

In other words, it doesn't make sense to mine if you are losing money doing it.

http://www.youtube.com/watch?v=y8Et28kBi1A&feature=related

BitMagic

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I'm so sorry guys, but is this forum just full of a bunch of illiterate fools? If you read anything in this post, read the big bold line.

Quote from: ElectricMucus on September 26, 2011, 05:08:43 PM

So this means miners are stupid? :p

Nah, just you.

Quote from: BubbleBoy on September 26, 2011, 05:12:26 PM

That aggressive tone is unwarranted - stopping from mining when you still earn enough to pay the electricity bill is a bad business decision. If you can't comprehend this simple fact then there's really nothing to talk about. I thought you were implying that the whole notion of sunk cost is a fallacy.

Quote from: PatrickHarnett on September 26, 2011, 07:47:18 PM

If short run marginal cost is below what you can sell for, you produce more. You hope to recover your "sunk" cost over the life of the project.

God, I wish my tone was unwarranted, but it sometimes reminds people to go back and read the OP. Clearly not in any of your cases. Maybe I can help you with that. Just read the bold bits:

Quote from: malevolent on September 26, 2011, 04:01:20 PM

It's no longer profitable to invest in new mining rigs. [Under this assumption], why isn't mining stopping?

And my response:

Quote from: BitMagic on September 26, 2011, 04:40:37 PM

If things stay the same, it will.

In other words, it doesn't make sense to mine if you are losing money doing it. Yes! That's what I said! And I only had to read the OP once! I bet you can figure out what this all means, Patrick? Well, let me help you along: If the short run marginal cost is above what you can sell it for, we will be seeing a difficulty drop. Indeed!

Quote from: teukon on September 26, 2011, 07:41:39 PM

Buying and paying off a card in this climate looks very tough and cannot be advised. However, if you already have the hardware and you aren't so worried about hardware deterioration then mining is surely still quite profitable.

My miner is still (price = 4.8 USD, difficulty = 1755425) just about beats electricity and not only do I pay the equivalent of about .17 USD for each kWh of electricity but my dual 5850 miner is currently housing an AMD Phenom II x6 1100T: overvolted, overclocked to 4.0 GHz, and running at 100% on all cores.

Perhaps some people have much higher electricity costs or are still trying to mine with Nvidia cards but I'd imagine the bulk of the miners are comfortably covering their electricity costs with their earnings.

Thanks for actually participating, Teukon. No sarcasm at all.

PatrickHarnett

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If short run marginal cost is below what you can sell for, you produce more. You hope to recover your "sunk" cost over the life of the project.

My cats still like the warmth from the computers.

Minsc

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The intrinsic value is bitcoins is their use as an uncontrollable internet monetary system and their brand recognition as being the first to do this. This in itself is what gives bitcoins their value.

teukon

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Buying and paying off a card in this climate looks very tough and cannot be advised. However, if you already have the hardware and you aren't so worried about hardware deterioration then mining is surely still quite profitable.

My miner is still (price = 4.8 USD, difficulty = 1755425) just about beats electricity and not only do I pay the equivalent of about .17 USD for each kWh of electricity but my dual 5850 miner is currently housing an AMD Phenom II x6 1100T: overvolted, overclocked to 4.0 GHz, and running at 100% on all cores.

Perhaps some people have much higher electricity costs or are still trying to mine with Nvidia cards but I'd imagine the bulk of the miners are comfortably covering their electricity costs with their earnings.

BubbleBoy

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Quote from: BitMagic on September 26, 2011, 05:03:50 PM

Quote from: BubbleBoy on September 26, 2011, 04:56:27 PM

There's a little something called sunk cost, and it's by no means a fallacy: when you've already committed a large budget of money and time on a mining project, you can't pull out if you are not "living the dream".

You don't know a damn thing about what you're talking about. It doesn't matter how much you spent up front, if you're lose money, net, you should stop mining. Also, read once in a while.

That aggressive tone is unwarranted - stopping from mining when you still earn enough to pay the electricity bill is a bad business decision. If you can't comprehend this simple fact then there's really nothing to talk about.

Indeed, continuing to mine when you can't cover current expenses is "throwing good money after bad" - what the Wikipedia article denotes as "Sunk cost fallacy". I thought you were implying that the whole notion of sunk cost is a fallacy.

ElectricMucus

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Marketing manager - GO MP

Quote from: BitMagic on September 26, 2011, 05:03:50 PM

Quote from: BubbleBoy on September 26, 2011, 04:56:27 PM

There's a little something called sunk cost, and it's by no means a fallacy: when you've already committed a large budget of money and time on a mining project, you can't pull out if you are not "living the dream".

You don't know a damn thing about what you're talking about. It doesn't matter how much you spent up front, if you're lose money, net, you should stop mining. Also, read once in a while.

So this means miners are stupid? :p

BitMagic

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Quote from: BubbleBoy on September 26, 2011, 04:56:27 PM

There's a little something called sunk cost, and it's by no means a fallacy: when you've already committed a large budget of money and time on a mining project, you can't pull out if you are not "living the dream".

You don't know a damn thing about what you're talking about. It doesn't matter how much you spent up front, if you're lose money, net, you should stop mining. Also, read once in a while.

Topic: Dead cat bounce - page 2. (Read 4272 times)