will the cost of mining affect the bitcoin price ? - page 2.

itsAj

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Quote from: dropt on August 24, 2014, 10:19:05 AM

Quote from: arbitrage001 on August 24, 2014, 04:47:47 AM

Quote from: dropt on August 24, 2014, 12:58:40 AM

Quote from: AceWallen on August 24, 2014, 12:52:48 AM

honestly, long term, it depends on the aggregate position miners take towards the market. for now and historically, that has been long (hoarding).

A good percentage of the HR is comprised of corporate mines who don't wish to hold or speculate on BTC's future value. They're interested in one thing: fiat and I believe they cash out their earnings as soon as possible.

Unless they do ASIC design and manufacturing, or have huge discount when buying in bulk, they will not have any profit if they cash it out as soon as possible.

Those groups are precisely who I'm talking about. KnC, Bitmain, Bitfury, Cointerra, etc. They all have their own chip IP and their own farms. their cost per coin is much lower than the average miners.

I think they would still have an interest in keeping the value of bitcoin high. If the value of bitcoin is higher then the retail value of the machines that they sell will be higher, creating more profits. These companies can make much more money selling their machines then they can mining themselves.

negafen

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Quote from: botany on August 24, 2014, 11:14:37 AM

Quote from: AdamSmith on August 24, 2014, 09:57:43 AM

Quote from: toinew on August 23, 2014, 12:44:11 PM

given the fact that the difficulty usually increases, if one day the cost of mining 1 bitcoin reaches 1000$, and that the bitcoin price is 500$

1) will the miners stop and therefore the cost of mining will go back to 500$/bitcoin

2) or will the miners only sell at 1000$ and therefore increase the price to 1000 $ ?

i guess a little bit of both, but maybe miners are powerful enough to dictate the price and make it rise ?

Cost of mining is now close to 600$. And the price of each bitcoin is now 500.

Either miners need to stop or price has to go up by a lot.

Do you mean the cost of mining for new miners?
For existing ones, they most probably have recovered the cost of the equipment. If the price of btc covers their electricity costs, they are in the green..

Network difficulty usually make their equipment obsolete before they can recover the cost of equipment, electricity, hosting and labor.

Odalv

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Quote from: dropt on August 24, 2014, 10:19:05 AM

Those groups are precisely who I'm talking about. KnC, Bitmain, Bitfury, Cointerra, etc. They all have their own chip IP and their own farms. their cost per coin is much lower than the average miners.

If this trend http://bitcoin.sipa.be/speed-lin-ever.png continues, their cost per coin will increase dramatically. ... and very soon :-)

botany

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Quote from: AdamSmith on August 24, 2014, 09:57:43 AM

Quote from: toinew on August 23, 2014, 12:44:11 PM

given the fact that the difficulty usually increases, if one day the cost of mining 1 bitcoin reaches 1000$, and that the bitcoin price is 500$

1) will the miners stop and therefore the cost of mining will go back to 500$/bitcoin

2) or will the miners only sell at 1000$ and therefore increase the price to 1000 $ ?

i guess a little bit of both, but maybe miners are powerful enough to dictate the price and make it rise ?

Cost of mining is now close to 600$. And the price of each bitcoin is now 500.

Either miners need to stop or price has to go up by a lot.

Do you mean the cost of mining for new miners?
For existing ones, they most probably have recovered the cost of the equipment. If the price of btc covers their electricity costs, they are in the green..

dropt

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Quote from: arbitrage001 on August 24, 2014, 04:47:47 AM

Quote from: dropt on August 24, 2014, 12:58:40 AM

Quote from: AceWallen on August 24, 2014, 12:52:48 AM

honestly, long term, it depends on the aggregate position miners take towards the market. for now and historically, that has been long (hoarding).

A good percentage of the HR is comprised of corporate mines who don't wish to hold or speculate on BTC's future value. They're interested in one thing: fiat and I believe they cash out their earnings as soon as possible.

Unless they do ASIC design and manufacturing, or have huge discount when buying in bulk, they will not have any profit if they cash it out as soon as possible.

Those groups are precisely who I'm talking about. KnC, Bitmain, Bitfury, Cointerra, etc. They all have their own chip IP and their own farms. their cost per coin is much lower than the average miners.

AdamSmith

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Quote from: toinew on August 23, 2014, 12:44:11 PM

given the fact that the difficulty usually increases, if one day the cost of mining 1 bitcoin reaches 1000$, and that the bitcoin price is 500$

1) will the miners stop and therefore the cost of mining will go back to 500$/bitcoin

2) or will the miners only sell at 1000$ and therefore increase the price to 1000 $ ?

i guess a little bit of both, but maybe miners are powerful enough to dictate the price and make it rise ?

Cost of mining is now close to 600$. And the price of each bitcoin is now 500.

Either miners need to stop or price has to go up by a lot.

Ayers

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Quote from: windjc on August 23, 2014, 02:36:15 PM

Mining follow price TO A POINT. But mining is a speculative bubble within the bitcoin bubble. It can certainly outpace price, as we have seen in the last 12 months. Yes, there are some miners who have figured out infrastructure costs to make $500 bitcoin very profitable, but a lot of miners have been left in the red.

it can outpace it, because some bitcoin miners isn't like some altcoin mining, here the mining is capitalized by mega gian farm who control most of the hash, they won't turn off their miners ever, unless bitcoin reach zero or near it

valvalis

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Of course it would make bitcoin prices rise.
But if no one else is interested to buy bitcoin, it will be useless.
Bitcoin prices will go up if there are people who wish to buy bitcoin with high prices and no one is selling bitcoin at a cheap price

arbitrage001

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Quote from: dropt on August 24, 2014, 12:58:40 AM

Quote from: AceWallen on August 24, 2014, 12:52:48 AM

honestly, long term, it depends on the aggregate position miners take towards the market. for now and historically, that has been long (hoarding).

A good percentage of the HR is comprised of corporate mines who don't wish to hold or speculate on BTC's future value. They're interested in one thing: fiat and I believe they cash out their earnings as soon as possible.

Unless they do ASIC design and manufacturing, or have huge discount when buying in bulk, they will not have any profit if they cash it out as soon as possible.

AceWallen

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Quote from: dropt on August 24, 2014, 12:58:40 AM

Quote from: AceWallen on August 24, 2014, 12:52:48 AM

honestly, long term, it depends on the aggregate position miners take towards the market. for now and historically, that has been long (hoarding).

A good percentage of the HR is comprised of corporate mines who don't wish to hold or speculate on BTC's future value. They're interested in one thing: fiat and I believe they cash out their earnings as soon as possible.

i am sure that's true. the question is, what is "a good percentage?" i am not convinced at this point that this represents a strong majority of the mining sector. but i'm just guessing, obviously.

dropt

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Quote from: AceWallen on August 24, 2014, 12:52:48 AM

honestly, long term, it depends on the aggregate position miners take towards the market. for now and historically, that has been long (hoarding).

A good percentage of the HR is comprised of corporate mines who don't wish to hold or speculate on BTC's future value. They're interested in one thing: fiat and I believe they cash out their earnings as soon as possible.

AceWallen

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honestly, long term, it depends on the aggregate position miners take towards the market. for now and historically, that has been long (hoarding). if price continues to drop long term, then we will see at what point miners start feeling the squeeze. my position is that it's the bitcoin price that, over the long term, affects the cost of mining. it's a longer term form of speculation -- for now, historical bull market = mine and hoard. but if miners begin to fear that dark days are ahead, some will drop out and stop racking up huge losses mining. at what volume? hard to say.

dropt

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Quote from: falllling on August 23, 2014, 10:09:35 PM

nope, it's like take or lose, either cut loose or lose everything, your choice

You really need to try harder, or maybe another tactic. You're not fooling anyone, in fact they're all pretty sure you're just a paid shill.

Whatever value your employer was getting out of you has gone to shit, you should change it up before you get fired.

botany

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We will have to look at the marginal cost of running the mining equipment... ie electricity and other costs.
As long as the btc price is sufficient to cover these, mining will continue.
There may not be any fresh investments in mining equipment, if btc does not cover the capital costs.

falllling

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Quote from: toinew on August 23, 2014, 12:44:11 PM

given the fact that the difficulty usually increases, if one day the cost of mining 1 bitcoin reaches 1000$, and that the bitcoin price is 500$

1) will the miners stop and therefore the cost of mining will go back to 500$/bitcoin

2) or will the miners only sell at 1000$ and therefore increase the price to 1000 $ ?

i guess a little bit of both, but maybe miners are powerful enough to dictate the price and make it rise ?

nope, it's like take or lose, either cut loose or lose everything, your choice

pening

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Quote from: phillipsjk on August 23, 2014, 01:18:23 PM

Mining difficulty follows price, not the other way around.

If too many miners drop out, the difficulty automatically adjusts so that the block interval is still about the same.

It is elegant in that the more Bitcoin is worth, the more resources are put into protecting it.

Nice in theory, but there's massive lag in the system from the investments made in hardware. It might have worked out if people just switched on and off a few commodity hardware based systems, but when people started investing $10k+ in GPU farms and even more so with ASIC, the dynamics changed. Miners cant afford to sell at the market rate if its substantially below their projected cost base, so they horde until the price rises.

However, once that hardware is bought, the miner is compelled to keep it running even at a small loss to hope to cover the higher capital costs already sunk. So option 1 of the OP is unlikely. The high cost of mining does tend to underpin a price.

Wilhelm

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Everything influences everything.
Neither determine the other.
Miners can stop if it is no longer profitable.
The cost of mining can determine the sales price.

windjc

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Mining follow price TO A POINT. But mining is a speculative bubble within the bitcoin bubble. It can certainly outpace price, as we have seen in the last 12 months. Yes, there are some miners who have figured out infrastructure costs to make $500 bitcoin very profitable, but a lot of miners have been left in the red.

itsAj

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Quote from: phillipsjk on August 23, 2014, 01:18:23 PM

Mining difficulty follows price, not the other way around.

If too many miners drop out, the difficulty automatically adjusts so that the block interval is still about the same.

It is elegant in that the more Bitcoin is worth, the more resources are put into protecting it.

This is correct. If the price of BTC increases, then the profitability of mining will increase, causing more people to want to mine and bring miners online. If the price of BTC falls, then mining will be less profitable and less people will want to mine (as it could potentially be unprofitable) so miners will be taken offline.

onlyu

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Quote from: phillipsjk on August 23, 2014, 01:18:23 PM

Mining difficulty follows price, not the other way around.

If too many miners drop out, the difficulty automatically adjusts so that the block interval is still about the same.

It is elegant in that the more Bitcoin is worth, the more resources are put into protecting it.

That is the reason it is cheaper to buy coin directly rather than mining.

If one is right about direction of price, the same amount of money benefit more by buying coin than buying miner.

Topic: will the cost of mining affect the bitcoin price ? - page 2. (Read 2672 times)