Topic: will the cost of mining affect the bitcoin price ? (Read 2683 times)

Quote from: BurtW on August 29, 2014, 02:28:43 PM

I think miners have generally gotten smart enough to not create so much demand that companies can sell out 6 month pre-orders in a single hour.

There are still far too many stupid miners. People are actually taking delivery of overpriced BFL hardware as we speak even though they are being offered a far more profitable refund option. Other people are dumping money into every Ponzi "cloud mining" website that pops up.

It is the new bitcoin users who put money into "cloud mining" and pump and dump coin. The community never seem to run out of fools.

I agree. Both will typically end up costing the "investor" money in the long run. The cloud mining companies give out unrealistic expectations as to how much difficulty will increase in the future, giving investors rose return expectations. All of the altcoins are....just shit and will eventually crash and burn.

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

Cost of mining is now close to 600$.

You must not be very good at mining then.

I don't mine but I have buddies who do. If your cost of mining is $600/BTC you might as well hang it up now because other, much smarter, people have figured out ways to mine at a much lower cost of production than you.

You are really losing $100 per bitcoin you mine? That is like beating your head against a wall. Stop that.

Anyone that has a cost of mining above what they can sell their bitcoin for will obviously not continue to mine (at least any rational person). There are some less efficient miners out there that will cost more on a per BTC basis to mine then the newer more efficient ones.

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

Cost of mining is now close to 600$.

You must not be very good at mining then.

I don't mine but I have buddies who do. If your cost of mining is $600/BTC you might as well hang it up now because other, much smarter, people have figured out ways to mine at a much lower cost of production than you.

You are really losing $100 per bitcoin you mine? That is like beating your head against a wall. Stop that.

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Quote from: the joint on August 26, 2014, 11:42:30 AM

Quote from: nuff on August 26, 2014, 11:11:41 AM

Right now, unless you are the manufacturer, miners are mining at negative profit in other words at a loss. But miners will still mine away anyway, for they are already invested in. They hope that price will rise but they don't realize the market don't really work that way. If miners are smart, they would stop mining and buy instead. Sure you're invested but far better to take advantage of the low price now and buy than to keep your miners running at a loss. But that is also why there are so many more poor people that rich ones.

Referring to bolded section, some miners *are* smart because mining can be a less risky way to invest at least inasmuch as you can reliably predict your , particularly if the price of BTC drops, and especially if you buy in at the right time. I've profited more from the Antminers that I've purchased than I would have if I had bought BTC outright simply because the average price of BTC hasn't changed much since I bought them.

Now, cloud hashing is just plain stupid -- I have no problem conceding that.

I would disagree with this. A miner will have generally fixed costs that are priced in fiat (electricity) so they will essentially need to sell some portion of their bitcoin they mine to cover these costs. If the price of bitcoin decreases then they will need to sell more of their bitcoin to cover their costs.

If you buy bitcoin on an exchange then you have the same amount of bitcoin regardless of the future price and would not have any additional holding costs.

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Quote from: the joint on August 26, 2014, 03:34:46 PM

Quote from: Hunyadi on August 26, 2014, 01:55:13 PM

I think earlier a lot of people started investing in bitcoin by mining. Currently, usually you have to be complete fool or very bad in math to purchase mining equipment. So, I guess, now if you want to invest in bitcoin, you have only one way...by buying.

Ugh...

This is *not* always the case, and I find it's usually the ones that are bad at math who make blanket assumptions like this.

Buying a miner is the only way you stand a chance at profiting even if the price of BTC goes down pending that you're not shorting BTC (which is not the same as buying BTC anyway).

It's not guaranteed, but at least it's not the same 0% probability of profiting -- or, conversely, the 100% probability of losing money -- if you buy BTC and then it tanks.

Furthermore, if mining conditions are favorable but the average price of BTC remains stable for a relatively long period of time, you will ROI with your miners before you ever see a profit from buying BTC, even if BTC goes up in the future. This is exactly what happened with my Antminers. If I had bought BTC instead of my Antminers, I'd still almost be at break-even. Instead, they've ROI'd almost twice over now.

Edit: ROI is now a verb :\

Yes it is possible to profit from mining. I'm miner myself and sometimes I get profit and sometimes not. -However, it requires quite a lot mining gear to be able to profit just 1 btc, and there's a risk that the equipment wont ROI. So, it might be easier to just buy bitcoins...

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Quote from: dropt on August 24, 2014, 12:06:19 AM

I think miners have generally gotten smart enough to not create so much demand that companies can sell out 6 month pre-orders in a single hour.

There are still far too many stupid miners. People are actually taking delivery of overpriced BFL hardware as we speak even though they are being offered a far more profitable refund option. Other people are dumping money into every Ponzi "cloud mining" website that pops up.

I agree that the demand is still likely higher then it should. People do fall for the cloud mining scams by taking their word for their estimate as to how much difficulty will rise when in reality it is rising many times their "estimate"

One thing that we saw late last year and to a lesser extent early this year is people paying, literally tens of thousands of dollars for the machines with the highest hashrates on the secondary market. There would have been more or less no way that they would have come anywhere close to breaking even, even before the cost of electricity is taken into consideration. This is one thing that we are not seeing anymore.

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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.

Well, technically he could be getting paid to make "bears" sound ridiculous, goading them into agreeing with his statements, thus tainting their reputation and fostering a genuine attitude of dismissal on these forums with progressively more moronic statements as time goes on.

He would still be a paid shill, just being paid by bulls. It's impossible to know for sure. This is one of the reasons I don't ignore these type of people; as their posting habits provide more insight than the words they contain.

the joint

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Quote from: Hunyadi on August 26, 2014, 01:55:13 PM

I think earlier a lot of people started investing in bitcoin by mining. Currently, usually you have to be complete fool or very bad in math to purchase mining equipment. So, I guess, now if you want to invest in bitcoin, you have only one way...by buying.

Ugh...

This is *not* always the case, and I find it's usually the ones that are bad at math who make blanket assumptions like this.

Buying a miner is the only way you stand a chance at profiting even if the price of BTC goes down pending that you're not shorting BTC (which is not the same as buying BTC anyway).

It's not guaranteed, but at least it's not the same 0% probability of profiting -- or, conversely, the 100% probability of losing money -- if you buy BTC and then it tanks.

Furthermore, if mining conditions are favorable but the average price of BTC remains stable for a relatively long period of time, you will ROI with your miners before you ever see a profit from buying BTC, even if BTC goes up in the future. This is exactly what happened with my Antminers. If I had bought BTC instead of my Antminers, I'd still almost be at break-even. Instead, they've ROI'd almost twice over now.

Edit: ROI is now a verb :\

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I think earlier a lot of people started investing in bitcoin by mining. Currently, usually you have to be complete fool or very bad in math to purchase mining equipment. So, I guess, now if you want to invest in bitcoin, you have only one way...by buying.

the joint

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Quote from: nuff on August 26, 2014, 11:11:41 AM

Right now, unless you are the manufacturer, miners are mining at negative profit in other words at a loss. But miners will still mine away anyway, for they are already invested in. They hope that price will rise but they don't realize the market don't really work that way. If miners are smart, they would stop mining and buy instead. Sure you're invested but far better to take advantage of the low price now and buy than to keep your miners running at a loss. But that is also why there are so many more poor people that rich ones.

Referring to bolded section, some miners *are* smart because mining can be a less risky way to invest at least inasmuch as you can reliably predict your , particularly if the price of BTC drops, and especially if you buy in at the right time. I've profited more from the Antminers that I've purchased than I would have if I had bought BTC outright simply because the average price of BTC hasn't changed much since I bought them.

Now, cloud hashing is just plain stupid -- I have no problem conceding that.

efreeti

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I think miners have generally gotten smart enough to not create so much demand that companies can sell out 6 month pre-orders in a single hour.

There are still far too many stupid miners. People are actually taking delivery of overpriced BFL hardware as we speak even though they are being offered a far more profitable refund option. Other people are dumping money into every Ponzi "cloud mining" website that pops up.

It is the new bitcoin users who put money into "cloud mining" and pump and dump coin. The community never seem to run out of fools.

nuff

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Right now, unless you are the manufacturer, miners are mining at negative profit in other words at a loss. But miners will still mine away anyway, for they are already invested in. They hope that price will rise but they don't realize the market don't really work that way. If miners are smart, they would stop mining and buy instead. Sure you're invested but far better to take advantage of the low price now and buy than to keep your miners running at a loss. But that is also why there are so many more poor people that rich ones.

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I think miners have generally gotten smart enough to not create so much demand that companies can sell out 6 month pre-orders in a single hour.

There are still far too many stupid miners. People are actually taking delivery of overpriced BFL hardware as we speak even though they are being offered a far more profitable refund option. Other people are dumping money into every Ponzi "cloud mining" website that pops up.

Agree, I still don't get it people mine for a loss (electricity more then btc generated). They can just buy BTC with the expected electricity..

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Quote from: itsAj on August 23, 2014, 02:11:50 PM

I think miners have generally gotten smart enough to not create so much demand that companies can sell out 6 month pre-orders in a single hour.

There are still far too many stupid miners. People are actually taking delivery of overpriced BFL hardware as we speak even though they are being offered a far more profitable refund option. Other people are dumping money into every Ponzi "cloud mining" website that pops up.

the joint

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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.

No, it is not correct, or rather I should say it is incomplete. Difficulty affects price because it impacts miner sales and also the rate at which mined BTC are liquidated to recoup mining costs. It is not now, nor has it ever been, a one-way function.

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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.

Referring to bolded section, no.

Difficulty affects price and price affects difficulty. It's absolutely not a one-way function.

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Quote from: AdamSmith on August 25, 2014, 06:18:20 AM

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

Actually, this is only true with the pre-order model they used and only ship out the miner on the last minute dead line where the customers have no chance of profit.

The miners will eventually wise up and given enough time, most of them will probably fade away.

I think miners have generally gotten smart enough to not create so much demand that companies can sell out 6 month pre-orders in a single hour. Part of the reason this was happening is that ASICs were very new at the time and no one predicted just how fast the difficulty was going to rise.

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

Actually, this is only true with the pre-order model they used and only ship out the miner on the last minute dead line where the customers have no chance of profit.

The miners will eventually wise up and given enough time, most of them will probably fade away.

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Quote from: trader001 on August 24, 2014, 04:37:19 PM

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

What Bitmain did is set up a warehouse full of the ASIC miners running.

As soon as customers order the miner, they bring it offline and ship it to customer as "new".

That would be considered unethical (if not illegal).

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

What Bitmain did is set up a warehouse full of the ASIC miners running.

As soon as customers order the miner, they bring it offline and ship it to customer as "new".

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

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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

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.

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

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

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: 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.

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

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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.

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

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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

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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.

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.

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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.

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.

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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.

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