Hashrate VS Price - page 3. | Bitcointalksearch.org

cypherdoc

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Quote from: Frozenlock on June 12, 2013, 11:38:08 PM

Quote from: cypherdoc on June 12, 2013, 11:28:47 PM

So, if you are right, then you expect hashrate to imminently begin to go sideways for a couple of months?

I expect it to follow the same pattern as the price: to peak and slowly diminish after that.
Last price peak in 2012 induced a hashrate increase that lasted for months.

Anyone has any data pointing to a reverse relationship, where hashrate would be driving price?

Well then you're gonna have some explaining to do in regards to timing because we are not going to peak and slowly diminish any time soon as Avalon batch 2 will be delivered in 1-3 days followed by batch 3 and more asicminers.

I also disagree with your visual interpretation of price always leading. If you really zoom in and look carefully I could make the opposite argument that hashrate leads. It's just that the price spikes are so violent in comparison that it looks like they're leading.

Your gold mining analogy is also off as gold miners do not have a philosophical motivation to help or secure a network as do bitcoin miners.

Frozenlock

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Quote from: byronbb on June 12, 2013, 11:48:23 PM

Imagine two identical gold mines, mined by two different companies, both offer stock. Mine Co A has a bunch of labourers with pick-axes and donkeys to pull mine carts, Mine Co B has a drill, dynamite, rail engines, and rock crushers. Obviously Mine Co B's stock will be worth more because they will be more efficient.

Except Bitcoin isn't a stock in your example, it's the gold.

Cranky4u

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Hash rates are simply a lag indicator of price...

byronbb

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HODL OR DIE

Imagine two identical gold mines, mined by two different companies, both offer stock. Mine Co A has a bunch of labourers with pick-axes and donkeys to pull mine carts, Mine Co B has a drill, dynamite, rail engines, and rock crushers. Obviously Mine Co B's stock will be worth more because they will be more efficient.

Frozenlock

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Quote from: cypherdoc on June 12, 2013, 11:28:47 PM

So, if you are right, then you expect hashrate to imminently begin to go sideways for a couple of months?

I expect it to follow the same pattern as the price: to peak and slowly diminish after that.
Last price peak in 2012 induced a hashrate increase that lasted for months.

Anyone has any data pointing to a reverse relationship, where hashrate would be driving price?

cypherdoc

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So, if you are right, then you expect hashrate to imminently begin to go sideways for a couple of months?

mgio

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Yes, you are right.

Most people have it backwards.

Mostly it's just wishful thinking on their part that more difficult mining will somehow cause their coins to be worth more. It's not true at all.

Frozenlock

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Quote from: notme on June 12, 2013, 10:41:59 PM

I agree with your overall point, but the data doesn't quite tell the story you are trying to portray. The piece you are missing is that the 2011 run up and the recent run up in difficulty were both triggered by a new technology that dramatically improved the efficiency of mining. In 2011 it was GPUs and in 2013 it is ASICs. ASICs are still being deployed and I expect a minimum of triple the current hash rate before we see difficulty top. As much as 10X the current difficulty may happen, depending on how the price goes. <-- Again, I agree price ultimately drives difficulty, but technology improvements shift gears. That being said, as soon as 28nm ASICs make up the majority of the network, we will see technology improvements capped by Moore's Law. We will then be in "top gear" and we can drive this thing like we stole it.

New and improved technologies do push the hashrate up, but one can still see the clear relation between price and hashrate.

In your explanation, where do the FPGAs fit?

dillpicklechips

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I'd be interested not in the hashrate but guesses on an average electricity used vs price. ASICs are a pretty big change in technology and the hashrate may be distorted for this transition period.

notme

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I agree with your overall point, but the data doesn't quite tell the story you are trying to portray. The piece you are missing is that the 2011 run up and the recent run up in difficulty were both triggered by a new technology that dramatically improved the efficiency of mining. In 2011 it was GPUs and in 2013 it is ASICs. ASICs are still being deployed and I expect a minimum of triple the current hash rate before we see difficulty top. As much as 10X the current difficulty may happen, depending on how the price goes. <-- Again, I agree price ultimately drives difficulty, but technology improvements shift gears. That being said, as soon as 28nm ASICs make up the majority of the network, we will see technology improvements capped by Moore's Law. We will then be in "top gear" and we can drive this thing like we stole it.

Frozenlock

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I've read at multiple places that some of you think that a higher hashrate means a higher price, while in fact I think it's the opposite.

But before, here's a little economic theory:

People will do hard stuff to obtain something because it is valuable, not the other way around.

With concrete example:

A man will go underwater to get a pearl because it's valuable; the pearl is not valuable because a man has to go get it.

People go deep to mine gold because it's valuable; gold is not valuable because people have to go deep to mine it.

In relation to Bitcoin, we could say that miners mine Bitcoin because it's valuable.
(Otherwise they would just fork the client and mine their own coin. Clearly the "mining" in itself isn't the goal.)

Further than that, here's a little graph:

What I want to show you is that a surge in price occurs before an increase in hashrate.
The price is driving the hashrate, not the other way around.

Each time there's a little bump in the price, you can see a response in the hashrate, lagging a few months behind.
The lag is understandable, as it takes time to purchase and set up a mining rig.
In case of falling prices, it can take a while for the miners to accept to stop their operations.

Some of you argue that the current rising hashrate indicates a future higher price.
On the contrary, I say that the rising hashrate is only a response of the recent price increase.

Topic: Hashrate VS Price - page 3. (Read 4264 times)