What happens to mining if the price of Bitcoin tanks?

odolvlobo

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Quote from: johnyj on January 29, 2014, 08:38:36 PM

Short term wise, difficulty might drop, since miners will shut down rigs and buy coins directly on the market (Most of the miners are hard core supporter of bitcoin and they want to get more coins no matter what), and those who mine at a loss will not sell the coins

That will be offset by the miners that mine more because of less competition, and buy less on the market. Difficulty and cost do not affect price.

johnyj

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Beyond Imagination

Short term wise, difficulty might drop, since miners will shut down rigs and buy coins directly on the market (Most of the miners are hard core supporter of bitcoin and they want to get more coins no matter what), and those who mine at a loss will not sell the coins

Long term wise, since more and more of them will shutdown rigs and buy coins, the coin price will be supported and the difficulty will rise again

So, a drop in the price will cause demand to rise and supply to fall, quickly ease the downward pressure

IamCANADIAN013

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Quote from: mestar on January 29, 2014, 08:57:39 AM

Quote from: IamCANADIAN013 on January 28, 2014, 01:54:43 AM

Hey all,

I've been wondering this since I started to get into it. What happens if the price of Bitcoin tanks? We see these huge companies sink tonnes of money into mining farms. If the price tanks, do they continue to mine at a huge loss or just shut them down? Would the difficulty ever go back down to try to boost the price?

Why would a lower difficulty boots the price?

I figure lower difficulty would boost the economy of it because more people would be inclined to minethat otherwise wouldn't with a higher difficulty. Kinda like how lowering interest rates boosts economic growth now.

mestar

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Quote from: IamCANADIAN013 on January 28, 2014, 01:54:43 AM

Hey all,

I've been wondering this since I started to get into it. What happens if the price of Bitcoin tanks? We see these huge companies sink tonnes of money into mining farms. If the price tanks, do they continue to mine at a huge loss or just shut them down? Would the difficulty ever go back down to try to boost the price?

Why would a lower difficulty boots the price?

odolvlobo

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The amount of electricity used by an ASIC is very low. The price of bitcoin would have to drop below $100 before power costs exceed the mining revenue. If the price does drop that low, then many miners will quit mining because it will no longer be profitable and the difficulty will drop. If the price drops but mining is still profitable, then the difficulty will continue rising, but not as quickly.

DieJohnny

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Quote from: IamCANADIAN013 on January 28, 2014, 01:54:43 AM

What happens if the price of Bitcoin tanks?

carnage and chaos, likely another coin would rise from the ashes

arkintunde

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Quote from: aminorex on January 28, 2014, 09:13:24 AM

sha256 hashing? not so much.

You're right, the protocol has huge potential. Whether it be with sha256 hashing or not is irrelevant, except to those who have machines that can only hash in sha256

.

jjc326

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I know, I think people would try to get out of their mining rigs and contracts as fast as possible. The only thing that got everyone interested in mining is the price shooting up. I think a lot of people invested thinking there's no way they could lose money, what's the worst tht can happen, they'll make money eventually and have btc. But if the BTC is not worth much, they lost out.

j68r

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Quote from: cowandtea on January 28, 2014, 07:24:03 AM

Quote from: IamCANADIAN013 on January 28, 2014, 01:54:43 AM

Hey all,

I've been wondering this since I started to get into it. What happens if the price of Bitcoin tanks? We see these huge companies sink tonnes of money into mining farms. If the price tanks, do they continue to mine at a huge loss or just shut them down? Would the difficulty ever go back down to try to boost the price?

Sorry if this has been answered elsewhere.

Well, if their mining cost (electricity etc) is higher then profit, then they should shut down since you can always buy Bitcoin using the electricity you paid...

Which then drives the price higher and makes mining economically attractive again.

aminorex

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Sine secretum non libertas

Quote from: arkintunde on January 28, 2014, 03:46:50 AM

[The technology has an infinite number of possible applications that we may not know about until some developer comes up with something exciting.

sha256 hashing? not so much.

cowandtea

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Quote from: IamCANADIAN013 on January 28, 2014, 01:54:43 AM

Hey all,

I've been wondering this since I started to get into it. What happens if the price of Bitcoin tanks? We see these huge companies sink tonnes of money into mining farms. If the price tanks, do they continue to mine at a huge loss or just shut them down? Would the difficulty ever go back down to try to boost the price?

Sorry if this has been answered elsewhere.

Well, if their mining cost (electricity etc) is higher then profit, then they should shut down since you can always buy Bitcoin using the electricity you paid...

arkintunde

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Quote from: IamCANADIAN013 on January 28, 2014, 02:37:32 AM

I guess we would see the market flooded by a lot of cheap mining equipment from people freaking out though.

That would be a sight to see. I would buy a lot of equipment if people went crazy selling theirs. The technology has an infinite number of possible applications that we may not know about until some developer comes up with something exciting. Imagine everyone sold all of their internet infrastructure equipment back when the dotcom bubble burst. It was years later when the genius sites like Youtube, Facebook, Twitter, etc. and applications like Napster, BitTorrent, etc. changed the internet as we knew it. I firmly believe Bitcoin has the same potential...the value of bitcoin aside, I want to take part in that potential and have invested in it because I believe in it.

threaded

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Quote from: IamCANADIAN013 on January 28, 2014, 02:37:32 AM

Can the difficulty actually go down though?

Yes, and it has in the past a few times.

IamCANADIAN013

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Quote from: arkintunde on January 28, 2014, 02:26:55 AM

I don't think anyone can really answer this. I don't think Bitcoin will tank in such a fashion though. I also think these companies that are sinking so much into mining hardware are not doing it just to mine bitcoin. They have bigger plans. When I read about the $5 Million Dollar investment from CoinSeed, all I could think of is a company like Coca Cola or some other large company coming out with their own coin to replace all the stupid ass reward systems that they currently have in place. They'll need someone to process the transactions. If you think about all of the dumb point systems there are and imagine them getting replaced by bitcoin related technologies, you can see how any hardware investment into Bitcoin may have a lasting presence beyond Bitcoin itself.

Interesting, I've never really thought about it that way. I don't really see it tanking either, but it's still an interesting concept. I guess there would be many options to try to boost the value if it ever did though. I guess we would see the market flooded by a lot of cheap mining equipment from people freaking out though.

Can the difficulty actually go down though?

arkintunde

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I don't think anyone can really answer this. I don't think Bitcoin will tank in such a fashion though. I also think these companies that are sinking so much into mining hardware are not doing it just to mine bitcoin. They have bigger plans. When I read about the $5 Million Dollar investment from CoinSeed, all I could think of is a company like Coca Cola or some other large company coming out with their own coin to replace all the stupid ass reward systems that they currently have in place. They'll need someone to process the transactions. If you think about all of the dumb point systems there are and imagine them getting replaced by bitcoin related technologies, you can see how any hardware investment into Bitcoin may have a lasting presence beyond Bitcoin itself.

IamCANADIAN013

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Hey all,

I've been wondering this since I started to get into it. What happens if the price of Bitcoin tanks? We see these huge companies sink tonnes of money into mining farms. If the price tanks, do they continue to mine at a huge loss or just shut them down? Would the difficulty ever go back down to try to boost the price?

Sorry if this has been answered elsewhere.

Topic: What happens to mining if the price of Bitcoin tanks? (Read 2275 times)