More than $1.5 million must move into BTC every day, just to sustain its price

Carsiden

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Quote from: EricTyle on August 19, 2014, 10:18:58 PM

Yeah. People made me think that miners get bitcoin and sell it immediately just to pay their electricity bill.

Correct me if I am wrong, at this point it's not 'not-profitable' because of the electricity bill but because of the cost of the device. Ye?

A large mining operation may be manufacturing their own miners and thus have a "purchase" cost for the miner that is a lot lower than the commercial product. They would also pay low energy cost by buying bulk (they are an energy company's best customer because the load is constant in contrast to other data centers) so they should get a good deal. Ergo cost for a commercial miner operation is quite a bit lower in short and long term compared to hobby mining.

A commercial miner has to report to authorities about the operation and profits and they need to lower the risk of price volatility. They can either sell the coins as they mine them, which would put pressure on the price, or they can lend the btc out if they believe this is a short term down and they want to own them long term. Either way they get a firm fiat value for their coins today that the tax authorities understand and can deal with and they can pay their utility bills.

So the OP has a point in my opinion. At what price is the equation sustainable?

cypherdoc

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Quote from: PenAndPaper on August 19, 2014, 10:32:41 PM

But merchant adoption increases bitcoin's popularity and credibility and that results in more capitals to flow into bitcoin.

and allows hodler to hodl waiting for the right time to make new purchases from popular new merchants instead of selling.

PenAndPaper

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But merchant adoption increases bitcoin's popularity and credibility and that results in more capitals to flow into bitcoin.

cypherdoc

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Quote from: hyphymikey on August 19, 2014, 01:19:04 PM

I don't sell any coins I mine. So I'm 100% certain you are wrong.

I am also one of the many who do not sell. Please take time to research before just throwing false ideas out there.

that's funny.

me too.

EricTyle

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Yeah. People made me think that miners get bitcoin and sell it immediately just to pay their electricity bill.

Correct me if I am wrong, at this point it's not 'not-profitable' because of the electricity bill but because of the cost of the device. Ye?

exocytosis

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Quote from: cr1776 on August 19, 2014, 07:09:18 PM

A lot of people are CLAIMING this, but it is illogical and unproven. It has been discussed in other threads, but still gets trotted out elsewhere as fact when it is likely exactly the opposite.

Really? Then what's driving price down?

beetcoin

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Quote from: cr1776 on August 19, 2014, 07:09:18 PM

Quote from: exocytosis on August 19, 2014, 11:24:14 AM

...
A lot of people are starting to notice that increased merchant adoption is actually driving price down, not up.
...

A lot of people are CLAIMING this, but it is illogical and unproven. It has been discussed in other threads, but still gets trotted out elsewhere as fact when it is likely exactly the opposite.

wait, what's the counter argument then? because merchants accepting bitcoins means they get circulated and the supply is larger than the demand.

botany

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Quote from: cr1776 on August 19, 2014, 07:09:18 PM

Quote from: exocytosis on August 19, 2014, 11:24:14 AM

...
A lot of people are starting to notice that increased merchant adoption is actually driving price down, not up.
...

A lot of people are CLAIMING this, but it is illogical and unproven. It has been discussed in other threads, but still gets trotted out elsewhere as fact when it is likely exactly the opposite.

People do make the distinction between short term and long term.....

beetcoin

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Quote from: exocytosis on August 19, 2014, 11:24:14 AM

Since 3600 coins are created daily, more than $1.5 million must move into Bitcoin every day, just to sustain the price of the currency.

A lot of people are starting to notice that increased merchant adoption is actually driving price down, not up. Merchant adoption has indeed increased a lot so far in 2014, but user adoption seems to have stagnated. And for good reason: Acquiring, storing and using bitcoins is still a cumbersome, unsafe and expensive process. It's simply too much of a hassle for the Average Joe, and he has nothing to gain by using BTC instead of fiat. Merchants, on the other hand, can save money by accepting Bitcoin.

So the question is: Will merchants start giving discounts to consumers using Bitcoin for their purchases? And if so: When will that start?

it's already started. Newegg is selling PS4s at $320 with bitcoin-only payment. not just that, but overstock is paying their employee bonuses in bitcoin. i think we should get the news that merchant adoption is dragging the price down, and the retailers who accept bitcoin should offset it by putting getting new hands some bitcoins.

https://bitcointalksearch.org/topic/newegg-offers-a-ps4-for-31999-with-bitcoin-exclusive-payment-only-747324

cr1776

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Quote from: exocytosis on August 19, 2014, 11:24:14 AM

...
A lot of people are starting to notice that increased merchant adoption is actually driving price down, not up.
...

A lot of people are CLAIMING this, but it is illogical and unproven. It has been discussed in other threads, but still gets trotted out elsewhere as fact when it is likely exactly the opposite.

2_Thumbs_Up

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Quote from: An amorous cow-herder on August 19, 2014, 02:03:08 PM

Quote from: Ultros on August 19, 2014, 01:27:20 PM

I don't sell any coin I mine either. Most miners I know hold their coins. This argument is getting old.

In case you hadnt noticed, hobby mining is dying. Its the big mining farms that dominate nowadays.
Point is fairly moot for other reasons though, those farms a most likely not selling on open market.

But those buying from the mining farms are buying from them instead of buying elsewhere, such as an exchange. So the downward pressure on the price is essentially the same regardless of where they sell.

But still, lets do some math.

1.5 million USD/day*365 days= 547.5 million USD/year.

According to Coindesk the 2014 YTD Venture Capital investments in Bitcoin companies is 159 million USD. If we assume the VC investements will continue at the same rate this year that will add up to be roughly 250 million USD this year by the end of 2014.

So in other words, in order for BTC to sustain its price, we need about twice the amount of money going directly into Bitcoin, as we have VC capital going into Bitcoin companies. I don't think that's very unreasonable, especially not considering some of the VC funders probably want a Bitcoin position as well.

An amorous cow-herder

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Quote from: romerun on August 19, 2014, 02:11:02 PM

Quote from: An amorous cow-herder on August 19, 2014, 02:03:08 PM

In case you hadnt noticed, hobby mining is dying. Its the big mining farms that dominate nowadays.
Point is fairly moot for other reasons though, those farms a most likely not selling on open market.

Why ? I thought pro miners are likely to dump coins to exchanges as soon as they get them to pay for the upkeep.

A.) People who cant dump without killing the price deal with people who cant buy without pumping the price.
B.) You couldnt charge a premium for clean coins. Wouldnt want to sell the "good stuff" with all those dirty coins on market now, would you?

romerun

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Bitcoin is new, makes sense to hodl.

Quote from: An amorous cow-herder on August 19, 2014, 02:03:08 PM

Quote from: Ultros on August 19, 2014, 01:27:20 PM

I don't sell any coin I mine either. Most miners I know hold their coins. This argument is getting old.

In case you hadnt noticed, hobby mining is dying. Its the big mining farms that dominate nowadays.
Point is fairly moot for other reasons though, those farms a most likely not selling on open market.

Why ? I thought pro miners are likely to dump coins to exchanges as soon as they get them to pay for the upkeep.

dropt

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Quote from: An amorous cow-herder on August 19, 2014, 02:03:08 PM

In case you hadnt noticed, hobby mining is dying. Its the big mining farms that dominate nowadays.
Point is fairly moot for other reasons though, those farms a most likely not selling on open market.

Truth. I had heard a rumour at one point that GABI had aligned with a large corporate mining entitity for their supply of coins. However, while I was unable to verify it, it's not outside of the realms of reality.

An amorous cow-herder

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Quote from: Ultros on August 19, 2014, 01:27:20 PM

I don't sell any coin I mine either. Most miners I know hold their coins. This argument is getting old.

In case you hadnt noticed, hobby mining is dying. Its the big mining farms that dominate nowadays.
Point is fairly moot for other reasons though, those farms a most likely not selling on open market.

Ultros

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I don't sell any coin I mine either. Most miners I know hold their coins. This argument is getting old.

hyphymikey

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I don't sell any coins I mine. So I'm 100% certain you are wrong.

I am also one of the many who do not sell. Please take time to research before just throwing false ideas out there.

spazzdla

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Quote from: spud21 on August 19, 2014, 11:51:07 AM

Quote from: exocytosis on August 19, 2014, 11:24:14 AM

Since 3600 coins are created daily, more than $1.5 million must move into Bitcoin every day, just to sustain the price of the currency.

Doesn't the price depend on if the people creating the coins are prepared to immediately sell them? If they immediately dump them the price will go down, but what if they hold them?

Yes...... If all miners hold their coins then..

Ignore this thread.

rocks

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Quote from: exocytosis on August 19, 2014, 11:24:14 AM

Since 3600 coins are created daily, more than $1.5 million must move into Bitcoin every day, just to sustain the price of the currency.

A lot of people are starting to notice that increased merchant adoption is actually driving price down, not up. Merchant adoption has indeed increased a lot so far in 2014, but user adoption seems to have stagnated. And for good reason: Acquiring, storing and using bitcoins is still a cumbersome, unsafe and expensive process. It's simply too much of a hassle for the Average Joe, and he has nothing to gain by using BTC instead of fiat. Merchants, on the other hand, can save money by accepting Bitcoin.

So the question is: Will merchants start giving discounts to consumers using Bitcoin for their purchases? And if so: When will that start?

And this is a statement then on just how much buying interest there is in bitcoin today.

That supply is static though, if that demand goes up so must the price.

Additionally that supply will decrease over time, in less than 2 years it will cut in half. If demand stays the same, the price must rise to compensate.

This was part of the reason the price shot up in 2013, supply halved in late 2012.

Chalkbot

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Quote from: exocytosis on August 19, 2014, 11:24:14 AM

Since 3600 coins are created daily, more than $1.5 million must move into Bitcoin every day, just to sustain the price of the currency.

Quote from: exocytosis on August 19, 2014, 11:24:14 AM

A lot of people are starting to notice that increased merchant adoption is actually driving price down, not up.

Quote from: exocytosis on August 19, 2014, 11:24:14 AM

Acquiring, storing and using bitcoins is still a cumbersome, unsafe and expensive process.

https://bitcoinarmory.com/
https://blockchain.info/wallet
Androiod Wallet
Iphone Wallet
https://www.circle.com/
https://coinbase.com/

Quote from: exocytosis on August 19, 2014, 11:24:14 AM

So the question is: Will merchants start giving discounts to consumers using Bitcoin for their purchases? And if so: When will that start?

www.bitcoinstore.com

Topic: More than $1.5 million must move into BTC every day, just to sustain its price (Read 1971 times)