Topic: My (Probably naive) take on the ASIC thing (Read 384 times)

Total newb here. I don't own a single bitcoin or fraction. Just spent two days immersing myself in reading forums and websites about it.

So after all my pondering and chin scratching it seems to me that bitcoin mining is headed to toward a point where miners are somply converting electricity into currency. I wasn't around but it seems that was a point it was at before, now ASIC has changed the game for awhile. If you can generate coin with ASIC right now you are in that sweet spot where your are ahead of the price curve, but of course you are also bending the curve at the same time against you.

As everyone already knows however you and everyone else will just be forcing the market find its new point of equilibrium which I figure must be supported by the cost of electricity plus some amount of overhead for hardware and other costs, and then some small amount of profit.

So just doing some rough back of the envelope math (I mean really rough), assuming electricity cost is .12 per MW, and assuming the threshold of profitability is being able to generate double the electricity cost in revenue I figure a single bitcoin is really worth about $2.00 today.

It doesn't make sense though that bitcoin would just simply drop to that point, and while it's dropping the difficulty will be increasing the entire time so now if I assume that the difficulty increases (thereby supporting a higher coin value) at the same rate as the price drops we now end up finding "equilibrium" at $20 per BC.

All of this of course assumes that mining cost is the SINGLE driving force behind the price of bitcoin, an assumption I am not really qualified to make but when you're making predictions you gotta make some assumptions as best you can.

Now I am not trying to predict the market for any other reason than trying to make up my own mind on whether to invest in ASIC miners or not and I have pretty well concluded that if I am even close to being right it is a BAD gamble. I think the better gamble is to simply buy BC directly when they are at, near, or even BELOW the equilibrium threshold, knowing that they MUST eventually go up (again assuming they don't simply vaporize). Gonna have to wait a few months for that though while we watch ASIC smash the rate down to the rate of electricity.

So I am a buyer at $20.