Why do i keep hearing "btc mined out of thin air" ? thus the price must go down

Beans

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The general public is really against bitcoin right now. If you go read user comments on any bitcoin news articles. It's 99-1 against bitcoin. They think it's some kind of imaginary money, printed out of thin air to run a ponzi scheme. Most don't see the distinction between btc and gox either. Some think bitcoin is already dead. I just read this post on yahoo.

Quote

You people bought into that bull(s)h(I)t, now buy your way out.

He posted that when the price was at $700. Even my own sister is guilty. She thought I quit mining because bitcoin was about worthless now. Apparently she had been using a gox chart.

We really need to something to turn this around. Gox really burned us bad. If they don't give back the bitcoins they have and liquidate them instead, were pretty screwed.

Wilhelm

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Quote from: Biodom on March 22, 2014, 02:01:55 PM

Quote from: seriouscoin on March 22, 2014, 11:32:14 AM

If you had bought btc at that time, you would have made EVEN more than mining at lost.
When you pay electrical cost of mining every month, you're essentially "buying" btc every month. If the cost is higher than the market value of btc, you're a sucker for paying above the market value. Ask anyone that calculated mining carefully, if they want btc, would they rather buy or mine? you will get the answer.

I think that markets needs to compensate miners more than pure speculators. Right now, mining is marginally profitable, but it will not be at ~$350 per BTC (average for industry). The situation where essential activity for the whole ecosystem is not supported will be untenable long term and will result either in severe coin scarcity or high transaction costs (eventually). Remember that mining is essential, but speculation is not.

In other words, continued difficulty rise with declining bitcoin price is detrimental to Bitcoin as a whole.

The difficulty can also drop/retarget this makes bitcoin mining just profitable enough so people/companies want to keep mining.
Also miners get transaction fees, if I'm not mistaken, making mining worth while even after the last bitcoin is mined.

Bitcoin mining is a technology driver since better SHA256 and SCRYPT chips arise

In the end we will have solar driven transaction farms in the Sahara desert Cheesy

(Are we going off topic here?!?)

Mining more coins does not push the price down since work has been done to get the BTC.
Analogy with gold. If we dig are asses off for gold it will not bring the price down. What will bring the price down is if we find an method to turn lead into pure gold, it can now be easily obtained by anyone and the value crashes to the price that represents the amount of work.

BitCoinsLOL

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Quote from: TERA on March 22, 2014, 01:21:32 AM

There seem to be two potential topics for this thread.
1. Mining's effect on the price
2. Mining's viability as a business

I can't tell which one is the topic here, and the OP seems only to address #2. The post is incoherent. Why is there swearing and emotions?

Because dumbfcks call dumbfcks, dumbfcks with emotion.

pungopete468

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The transaction volume will increase as time goes on. Right now the volume is low at least partially because the current price is less than 50% of the ATH. People are encouraged to hold because many of them don't want to realize the loss.

The growth of the infrastructure and the growth in the volume of transactions aren't directly related. The growth of infrastructure only implies that there is an underlying desire to make transactions and it happens to be growing...

The growth of wallets isn't a tell-all indicator. The rapid growth of zero wallets doesn't signal new adoption but the increase in wallets across the other ranges is a good indicator.

The fact that transaction volume is increasing during a period when the price is dropping is a very good signal.

Biodom

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Regardless, there is NOT much growth in transactions, just the growth in difficulty-the only part of the system that is growing. Wallet numbers are BS because 99% of them are empty. If you order anything on many sites, they generate a wallet address, then empty it and it stays empty...forever. Just facts!
Explain this:
https://blockchain.info/charts/n-transactions?showDataPoints=false×pan=1year&show_header=true&daysAverageString=7&scale=0&address=

No growth in transactions-no future. Conclusion: Devs have to provide tools that public can easily use in txns or bitcoin will wither and die.

pungopete468

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Mining is definitely work, the more mining equipment you manage the more difficult it becomes. Management is a fairly common job and managers expect to be paid. The miner is part of the network, managing your rigs is work.

The fees will go down as the price goes up, the block reward will halve, and the 1MB block size will be increased as the transaction activity picks up...

Mining is definitely work...

Ibian

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Quote from: Biodom on March 22, 2014, 05:37:33 PM

Quote from: Ibian on March 22, 2014, 05:18:36 PM

Quote from: Biodom on March 22, 2014, 05:14:46 PM

Quote from: Ibian on March 22, 2014, 04:55:50 PM

And calling mining "real" work is just rude. Plugging in a piece of hardware that someone else built is not work, it's just investing, same as the rest of us are doing. Only with a higher barrier to entry than buying a few coins.

Oh, boy. I guess that you never mined.
"Mining" is much more involved than just plugging in and is more akin to "farming".
The proverbial "cow" sometimes gets sick, overheats, makes strange noises, loses internet connection (hmmm, can cows do that?), etc.
One point is is actually without doubt: No miners-No network. No speculative buying or selling and instead buying or selling strictly for purchases-and network will survive, albeit at lower $$ value, perhaps.

The occasional ISP problem is not even on your end, unless you fucked up somehow (in which case, stop doing that). Overheating would be a flaw from the manufacturers side. It's still just plugging the thing in.

Which is getting off the point. Which is, equilibrium.

Your point is equilibrium, and my point is that fees have to increase, perhaps dramatically. It will happen sooner or later (once newly mined coins will trickle down slower-in 2016 or the price of bitcoin crashes, whichever comes first).

You are wrong. The fees will go down, as they have several times already. And the reason is simple. Part of what makes bitcoin valuable is the ability to move money cheaper than through banks. Once the price rises hundreds or thousands of times the current fee will no longer be cheap.

Biodom

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Quote from: Ibian on March 22, 2014, 05:18:36 PM

Quote from: Biodom on March 22, 2014, 05:14:46 PM

Quote from: Ibian on March 22, 2014, 04:55:50 PM

And calling mining "real" work is just rude. Plugging in a piece of hardware that someone else built is not work, it's just investing, same as the rest of us are doing. Only with a higher barrier to entry than buying a few coins.

Oh, boy. I guess that you never mined.
"Mining" is much more involved than just plugging in and is more akin to "farming".
The proverbial "cow" sometimes gets sick, overheats, makes strange noises, loses internet connection (hmmm, can cows do that?), etc.
One point is is actually without doubt: No miners-No network. No speculative buying or selling and instead buying or selling strictly for purchases-and network will survive, albeit at lower $$ value, perhaps.

The occasional ISP problem is not even on your end, unless you fucked up somehow (in which case, stop doing that). Overheating would be a flaw from the manufacturers side. It's still just plugging the thing in.

Which is getting off the point. Which is, equilibrium.

Your point is equilibrium, and my point is that fees have to increase, perhaps dramatically. It will happen sooner or later (once newly mined coins will trickle down slower-in 2016 or the price of bitcoin crashes, whichever comes first).

Ibian

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Quote from: Biodom on March 22, 2014, 05:14:46 PM

Quote from: Ibian on March 22, 2014, 04:55:50 PM

And calling mining "real" work is just rude. Plugging in a piece of hardware that someone else built is not work, it's just investing, same as the rest of us are doing. Only with a higher barrier to entry than buying a few coins.

Oh, boy. I guess that you never mined.
"Mining" is much more involved than just plugging in and is more akin to "farming".
The proverbial "cow" sometimes gets sick, overheats, makes strange noises, loses internet connection (hmmm, can cows do that?), etc.
One point is is actually without doubt: No miners-No network. No speculative buying or selling and instead buying or selling strictly for purchases-and network will survive, albeit at lower $$ value, perhaps.

The occasional ISP problem is not even on your end, unless you fucked up somehow (in which case, stop doing that). Overheating would be a flaw from the manufacturers side. It's still just plugging the thing in.

Which is getting off the point. Which is, equilibrium.

Biodom

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Quote from: Ibian on March 22, 2014, 04:55:50 PM

And calling mining "real" work is just rude. Plugging in a piece of hardware that someone else built is not work, it's just investing, same as the rest of us are doing. Only with a higher barrier to entry than buying a few coins.

Oh, boy. I guess that you never mined.
"Mining" is much more involved than just plugging in and is more akin to "farming".
The proverbial "cow" sometimes gets sick, overheats, makes strange noises, loses internet connection (hmmm, can cows do that?), etc.
One point is is actually without doubt: No miners-No network. No speculative buying or selling and instead buying or selling strictly for purchases-and network will survive, albeit at a lower $$ value, perhaps.

RyNinDaCleM

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Legen -wait for it- dary

Quote from: Biodom on March 22, 2014, 04:32:18 PM

Quote from: RyNinDaCleM on March 22, 2014, 04:23:50 PM

This is why unprofitable miners stop and buy instead of mine. This has a two part effect... You get lower hashrate and higher prices. Then mining becomes profitable again for those who were barely profitable before the decline

This is rather general point of view that does not take into consideration the ability of quite a few entities to move the market fast. It would only probably take a measly $10mil to move BTC at least 10% or more one way or another.

In addition, seeing that either buying or selling BTC involves fees of 0.4-1% with roundtrip on coinbase being 2%, I see no other solution as for miners to eventually require 0.5% MINIMAL fee on transactions vs pennies right now (with some hard limit for very large txns). After all, miners are processing these tranaction and doing "real" work vs coinbase that charges 1% just for changing ownership of BTC they already presumably have.

With the client's default tx fee of .0005BTC for a transaction and the average of 388 tx's per block, that comes out to .194BTC ($128.04) per block of tx fees. Granted the movement of older coins has no "requirement" for a tx fee, but most are required. So you feel a 10 fold rise in fees is appropriate?
The idea is that, with time, there will be enough transactions to support mining on it's own, hence the reward halving every 210,000 blocks. What is needed is more unique transactions rather than a higher fee per tx. Half of the awesomeness that is Bitcoin is that you can send money for very little fee. A 0.5% fee is only marginally better than a credit card except it's payed by the sender and not divided up between all users.

Ibian

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Quote from: Biodom on March 22, 2014, 04:32:18 PM

Quote from: RyNinDaCleM on March 22, 2014, 04:23:50 PM

This is why unprofitable miners stop and buy instead of mine. This has a two part effect... You get lower hashrate and higher prices. Then mining becomes profitable again for those who were barely profitable before the decline

This is rather general point of view that does not take into consideration the ability of quite a few entities to move the market fast. It would only probably take a measly $10mil to move BTC at least 10% or more one way or another.

In addition, seeing that either buying or selling BTC involves fees of 0.4-1% with roundtrip on coinbase being 2%, I see no other solution as for miners to eventually require 0.5% MINIMAL fee on transactions vs pennies right now (with some hard limit for very large txns). After all, miners are processing these transactions and doing "real" work vs coinbase that charges 1% just for changing ownership of BTC they already presumably have.

Not necessary. If mining stop being profitable to miners, then some of them will drop out. This will lower the difficulty, which will make mining profitable to those who remain. Then the miners who left will come back, and eventually equilibrium will be reached. This is all part of the protocol.

And calling mining "real" work is just rude. Plugging in a piece of hardware that someone else built is not work, it's just investing, same as the rest of us are doing. Only with a higher barrier to entry than buying a few coins.

Biodom

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Quote from: RyNinDaCleM on March 22, 2014, 04:23:50 PM

This is why unprofitable miners stop and buy instead of mine. This has a two part effect... You get lower hashrate and higher prices. Then mining becomes profitable again for those who were barely profitable before the decline

This is rather general point of view that does not take into consideration the ability of quite a few entities to move the market fast. It would only probably take a measly $10mil to move BTC at least 10% or more one way or another.

In addition, seeing that either buying or selling BTC involves fees of 0.4-1% with roundtrip on coinbase being 2%, I see no other solution as for miners to eventually require 0.5% MINIMAL fee on transactions vs pennies right now (with some hard limit for very large txns). After all, miners are processing these transactions and doing "real" work vs coinbase that charges 1% just for changing ownership of BTC they already presumably have.

RyNinDaCleM

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Legen -wait for it- dary

Quote from: Biodom on March 22, 2014, 02:48:03 PM

Quote from: seriouscoin on March 22, 2014, 02:36:27 PM

In other words, continued difficulty rise with declining bitcoin price is detrimental to Bitcoin as a whole.

Did you read my post above? We already had this back in 2011, 2012.

The fact that you had that in 2011 is largely irrelevant because the network was 0.1Th-1Th/s then and it grew 300000-3000000 times since.
BTW, difficulty DID decrease between July and Dec 2011. No such luck in the last 4 mo.

This is why unprofitable miners stop and buy instead of mine. This has a two part effect... You get lower hashrate and higher prices. Then mining becomes profitable again for those who were barely profitable before the decline

Biodom

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Quote from: seriouscoin on March 22, 2014, 02:36:27 PM

In other words, continued difficulty rise with declining bitcoin price is detrimental to Bitcoin as a whole.

Did you read my post above? We already had this back in 2011, 2012.

The fact that you had that in 2011 is largely irrelevant because the network was 0.1Th-1Th/s then and it grew 300000-3000000 times since.
BTW, difficulty DID decrease between July and Dec 2011. No such luck in the last 4 mo.

seriouscoin

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Quote from: Biodom on March 22, 2014, 02:01:55 PM

Quote from: seriouscoin on March 22, 2014, 11:32:14 AM

If you had bought btc at that time, you would have made EVEN more than mining at lost.
When you pay electrical cost of mining every month, you're essentially "buying" btc every month. If the cost is higher than the market value of btc, you're a sucker for paying above the market value. Ask anyone that calculated mining carefully, if they want btc, would they rather buy or mine? you will get the answer.

I think that markets needs to compensate miners more than pure speculators. Right now, mining is marginally profitable, but it will not be at ~$350 per BTC (average for industry). The situation where essential activity for the whole ecosystem is not supported will be untenable long term and will result either in severe coin scarcity or high transaction costs (eventually). Remember that mining is essential, but speculation is not.

In other words, continued difficulty rise with declining bitcoin price is detrimental to Bitcoin as a whole.

Did you read my post above? We already had this back in 2011, 2012.

Biodom

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Quote from: seriouscoin on March 22, 2014, 11:32:14 AM

If you had bought btc at that time, you would have made EVEN more than mining at lost.
When you pay electrical cost of mining every month, you're essentially "buying" btc every month. If the cost is higher than the market value of btc, you're a sucker for paying above the market value. Ask anyone that calculated mining carefully, if they want btc, would they rather buy or mine? you will get the answer.

I think that markets needs to compensate miners more than pure speculators. Right now, mining is marginally profitable, but it will not be at ~$350 per BTC (average for industry). The situation where essential activity for the whole ecosystem is not supported will be untenable long term and will result either in severe coin scarcity or high transaction costs (eventually). Remember that mining is essential, but speculation is not.

In other words, continued difficulty rise with declining bitcoin price is detrimental to Bitcoin as a whole.

seriouscoin

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Quote from: Wilhelm on March 22, 2014, 12:47:46 PM

Quote from: seriouscoin on March 22, 2014, 11:32:14 AM

Quote from: Wilhelm on March 22, 2014, 05:31:03 AM

I still mine on GPUs and mining is still very very profitable in my opinion even though many say it is not. I mine altcoins and exchange for bitcoin and I live in an expensive electricity country.

The OP is simply looking at mining the wrong way I made that mistake long ago when BTC was around the $100 mark and I broke even.
Most people look at the coin value when they mint the coins. Yes this will break even or become a loss but if you look at the future value of bitcoin mining can be very cheap.
If a BTC becomes 2-10K then electricity is cheap and mining equipment too. If I had kept on mining then I would have much more coins now.

Miners are no longer pure miners but also speculators. Since the long term trend is still up then mining is still profitable!!

On the comment "btc mined out of thin air": Yes a minted BTC is generated by the network out of thin air, this does not mean no work had to be done for it to fall out of the air.

My $0.02

We went over this in 2011 MANY times, if you speculate on the future price of bitcoin, you better buy btc at current exchange rate. Because mining at lost mean you paid more.... terrible thinking.

If you had bought btc at that time, you would have made EVEN more than mining at lost.

When you pay electrical cost of mining every month, you're essentially "buying" btc every month. If the cost is higher than the market value of btc, you're a sucker for paying above the market value. Ask anyone that calculated mining carefully, if they want btc, would they rather buy or mine? you will get the answer.

Very good point but buying bitcoin isn't/wasn't always possible. How many times did you try to buy bitcoin and either the coins were all gone or you have to wait for 2 months to get money into your account.
Some countries block transactions to bitcoin companies. Some bitcoin companies are scams.

Mining guarantees an income of small amounts so it is a way to invest in small portions of money + free heating

Mining is also fun to do. Mining altcoins can still be profitable.

I also buy coins by the way

Well when you look at mining as a hobby and not an investment, all logics are thrown out

I agree that mining is the way to go with you cant buy btc easily. I can only speak for U.S.

Wilhelm

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Quote from: seriouscoin on March 22, 2014, 11:32:14 AM

Quote from: Wilhelm on March 22, 2014, 05:31:03 AM

I still mine on GPUs and mining is still very very profitable in my opinion even though many say it is not. I mine altcoins and exchange for bitcoin and I live in an expensive electricity country.

The OP is simply looking at mining the wrong way I made that mistake long ago when BTC was around the $100 mark and I broke even.
Most people look at the coin value when they mint the coins. Yes this will break even or become a loss but if you look at the future value of bitcoin mining can be very cheap.
If a BTC becomes 2-10K then electricity is cheap and mining equipment too. If I had kept on mining then I would have much more coins now.

Miners are no longer pure miners but also speculators. Since the long term trend is still up then mining is still profitable!!

On the comment "btc mined out of thin air": Yes a minted BTC is generated by the network out of thin air, this does not mean no work had to be done for it to fall out of the air.

My $0.02

We went over this in 2011 MANY times, if you speculate on the future price of bitcoin, you better buy btc at current exchange rate. Because mining at lost mean you paid more.... terrible thinking.

If you had bought btc at that time, you would have made EVEN more than mining at lost.

When you pay electrical cost of mining every month, you're essentially "buying" btc every month. If the cost is higher than the market value of btc, you're a sucker for paying above the market value. Ask anyone that calculated mining carefully, if they want btc, would they rather buy or mine? you will get the answer.

Very good point but buying bitcoin isn't/wasn't always possible. How many times did you try to buy bitcoin and either the coins were all gone or you have to wait for 2 months to get money into your account.
Some countries block transactions to bitcoin companies. Some bitcoin companies are scams.

Mining guarantees an income of small amounts so it is a way to invest in small portions of money + free heating

Mining is also fun to do. Mining altcoins can still be profitable.

I also buy coins by the way

seriouscoin

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Quote from: raid_n on March 22, 2014, 02:03:15 AM

I think bitcoin mining is at an interesting stage.

We've been thro this stage more than Twice.....

First was back 2011 when btc hovering around $2-3 after the first crash

Second was back in 2012 when btc was hovering around $7-8 (b4 Litecoin could be mined with GPU)

We all know what happened from those price point.

Asic chips are getting more mature. More and more companies pushing out mining chips. The technology will slow down as it reaches 28nm. We will have around double performance than current 40nm chips and we will stay there for 1+ year b4 20nm can be feasible (capital cost). So i expect difficulty will keep on rising until then.

Topic: Why do i keep hearing "btc mined out of thin air" ? thus the price must go down (Read 1924 times)