The vast majority of the currency is held by miners. When they need the money, or are afraid they can't recoup costs. They will drop the market. I think we could easily see $15 again in the next week.
Oops, You was right 14.6
Topic: Will the unprofitable mining actually hurt Bitcoin price? (Read 5469 times)
Oops, You was right 14.6
Actually, miners do change the number of bitcoins generated - if hashing power constanty increases, we get more than 300BTC per hour, as the difficulty only changes every 2016 blocks.
The inverse also applies.
Whether this changes how many are sold much, I don't know
The inverse also applies.
Whether this changes how many are sold much, I don't know
hero member
Activity: 756
Merit: 500
It's all fun and games until somebody loses an eye
Yes, the number of bitcoin is increasing at an almost constant rate (for now), but not the price to produce them! Higher difficulty means the energy and effort to produce a bitcoin will be higher so miners will not sell it at a low price. Would you sell something you payed 10$ for 7$? I guess that's a no.
So if you paid $1000 for $100 worth of gold, would that make gold rise to $1000 soon so you could sell it or would it just make you stupid?
Mining bitcoins for $10 when the price is $7 will not drive the price up. This is a logically fallacy and you're conflating sunk costs into price. What you paid, you paid, you can't change that. Beyond that you will want to sell high and buy low just like anyone else. If you think $7 is low and it will eventually go to $10, then you hold on to it. If you think $7 is a peak, then you're a fool to hold on to it even though you're selling at a loss. Miners do not dictate the market and they do not even put pressure on market prices. Supply is supply, demand is demand.
Would I sell something I paid $10 for, for $7? That question requires more information. If I bought something worth $2 for $10, and someone stupid offered me $7 for it, I'd be stupid not to sell at a loss because the whole situation is stupid all around. When mining becomes too expensive miners will stop mining, not continue paying for bitcoins in the hopes that they can sell them higher than the current market rate! (Unless they believe price to increase dramatically in the future!)
You seems having hard times understating that. Will you buy something for 10$ (keep mining) and resell it for 7$?
If the sole perpose of buying the item is to sell it, then buying for $10 and selling for $7 is silly. But people often buy items for more than they could sell them for. Consider buying a new car for $20,000. As soon as you drive it off the lot, you could maybe get $15000 for it. People buy cars all the time, are they all stupid? And now you will probably say bitcoins have no other use besides being sold, that argument has been addressed here on the forums already.
See the poll about when people will quit mining: http://forum.bitcoin.org/index.php?topic=24542.0
Yes, the number of bitcoin is increasing at an almost constant rate (for now), but not the price to produce them! Higher difficulty means the energy and effort to produce a bitcoin will be higher so miners will not sell it at a low price. Would you sell something you payed 10$ for 7$? I guess that's a no.
So if you paid $1000 for $100 worth of gold, would that make gold rise to $1000 soon so you could sell it or would it just make you stupid?
Mining bitcoins for $10 when the price is $7 will not drive the price up. This is a logically fallacy and you're conflating sunk costs into price. What you paid, you paid, you can't change that. Beyond that you will want to sell high and buy low just like anyone else. If you think $7 is low and it will eventually go to $10, then you hold on to it. If you think $7 is a peak, then you're a fool to hold on to it even though you're selling at a loss. Miners do not dictate the market and they do not even put pressure on market prices. Supply is supply, demand is demand.
Would I sell something I paid $10 for, for $7? That question requires more information. If I bought something worth $2 for $10, and someone stupid offered me $7 for it, I'd be stupid not to sell at a loss because the whole situation is stupid all around. When mining becomes too expensive miners will stop mining, not continue paying for bitcoins in the hopes that they can sell them higher than the current market rate! (Unless they believe price to increase dramatically in the future!)
You seems having hard times understating that. Will you buy something for 10$ (keep mining) and resell it for 7$?
Jesus, did you read my post at all?
It doesn't matter what I paid for it. I will sell it at highest price I can get - if I think it will go up, I will hold on, if I think it will go down then I will sell. The market doesn't feel sympathy for what I paid for it.
I give up. I suggest you look at http://en.wikipedia.org/wiki/Shall_and_will
Yes, the number of bitcoin is increasing at an almost constant rate (for now), but not the price to produce them! Higher difficulty means the energy and effort to produce a bitcoin will be higher so miners will not sell it at a low price. Would you sell something you payed 10$ for 7$? I guess that's a no.
So if you paid $1000 for $100 worth of gold, would that make gold rise to $1000 soon so you could sell it or would it just make you stupid?
Mining bitcoins for $10 when the price is $7 will not drive the price up. This is a logically fallacy and you're conflating sunk costs into price. What you paid, you paid, you can't change that. Beyond that you will want to sell high and buy low just like anyone else. If you think $7 is low and it will eventually go to $10, then you hold on to it. If you think $7 is a peak, then you're a fool to hold on to it even though you're selling at a loss. Miners do not dictate the market and they do not even put pressure on market prices. Supply is supply, demand is demand.
Would I sell something I paid $10 for, for $7? That question requires more information. If I bought something worth $2 for $10, and someone stupid offered me $7 for it, I'd be stupid not to sell at a loss because the whole situation is stupid all around. When mining becomes too expensive miners will stop mining, not continue paying for bitcoins in the hopes that they can sell them higher than the current market rate! (Unless they believe price to increase dramatically in the future!)
You seems having hard times understating that. Will you buy something for 10$ (keep mining) and resell it for 7$?
Jesus, did you read my post at all?
It doesn't matter what I paid for it. I will sell it at highest price I can get - if I think it will go up, I will hold on, if I think it will go down then I will sell. The market doesn't feel sympathy for what I paid for it.
Q: Will unprofitable mining hurt Bitcoin price?
A: Maybe.
The logical fallacy it seems many have been operating under, that bitcoin price should follow mining difficulty, has led to an artificial corelation between rise in bitcoin price and rise in mining difficulty. If the only market participants were miners, you would have exactly a pyramid scheme with some technical window dressing. Now, this is not all the market is, but what part?
As long as there is widespread faith in bitcoin and a growing REAL market, there should be no catastrophe. However, it might take another three years of trading at $17 to work through the artificially pent up currency supply.
A: Maybe.
The logical fallacy it seems many have been operating under, that bitcoin price should follow mining difficulty, has led to an artificial corelation between rise in bitcoin price and rise in mining difficulty. If the only market participants were miners, you would have exactly a pyramid scheme with some technical window dressing. Now, this is not all the market is, but what part?
As long as there is widespread faith in bitcoin and a growing REAL market, there should be no catastrophe. However, it might take another three years of trading at $17 to work through the artificially pent up currency supply.
Yes, the number of bitcoin is increasing at an almost constant rate (for now), but not the price to produce them! Higher difficulty means the energy and effort to produce a bitcoin will be higher so miners will not sell it at a low price. Would you sell something you payed 10$ for 7$? I guess that's a no.
So if you paid $1000 for $100 worth of gold, would that make gold rise to $1000 soon so you could sell it or would it just make you stupid?
Mining bitcoins for $10 when the price is $7 will not drive the price up. This is a logically fallacy and you're conflating sunk costs into price. What you paid, you paid, you can't change that. Beyond that you will want to sell high and buy low just like anyone else. If you think $7 is low and it will eventually go to $10, then you hold on to it. If you think $7 is a peak, then you're a fool to hold on to it even though you're selling at a loss. Miners do not dictate the market and they do not even put pressure on market prices. Supply is supply, demand is demand.
Would I sell something I paid $10 for, for $7? That question requires more information. If I bought something worth $2 for $10, and someone stupid offered me $7 for it, I'd be stupid not to sell at a loss because the whole situation is stupid all around. When mining becomes too expensive miners will stop mining, not continue paying for bitcoins in the hopes that they can sell them higher than the current market rate! (Unless they believe price to increase dramatically in the future!)
You seems having hard times understating that. Will you buy something for 10$ (keep mining) and resell it for 7$?
The vast majority of the currency is held by miners. When they need the money, or are afraid they can't recoup costs. They will drop the market. I think we could easily see $15 again in the next week.
Can you prove that the bitcoins are still held by the miners? That seems like a statement that needs a source!
That's my supposition. It can be inferred from the total number of bitcoins that exist, the price per bitcoin and a realistic value of the bitcoin economy.
I don't see why everyone seems to think mining is unprofitable .... I mine it costs 33 dollars (usd) to power my mining machine .... at current prices even if they fall that 2 / 3 maybe 4 btc a month ... I'm making atleast one every 2 days so in one week I pay for one months worth of power ... that leaves 3 weeks for profit ... if btc fall to 11 dollars that's 6 months without diff. adjustment with prices where they are its probably 6 months with diff adjustment to pay back a 600 dollar investment
i both mine and buy. especially since it seems cheaper to buy right now at $17 than to invest in mining. i spent ~ $600 a week ago on 4 video cards (2 of which i'll be returning to BestBuy) and so far i've mined only about 4.5 Bitcoins. = ~ $75.00 . if i would have used that same $600 to buy bitcoins directly, i'd have ~ 35 bitcoins and a lower electricity bill.
so.... in effect unprofitable mining helps the price of bitcoin since it's smarter to buy than to mine.
so.... in effect unprofitable mining helps the price of bitcoin since it's smarter to buy than to mine.
Miners hoard and sell bitcoin. They never buy it. So how could the buying interest go down? It's already at zero from the miners.
What's keeping the price up is speculators and investors who are buying up whatever the few miners are selling.
What's keeping the price up is speculators and investors who are buying up whatever the few miners are selling.
Bitcoins need not exist in a vacuum, there can be other things miners can mine.
So we can have not just monolithically "miners" but a potential distinction between combinations of "miners who already mined some bitcoin" and "miners who might mine some bitcoin".
Miners who already mined some bitcoin might consider selling some bitcoin. Miners who might mine some bitcoin potentially / hypothetically might mine something else instead or as well.
If interest does turn out to follow mining to any extent and interest does turn out to lead to some demand to some extent then whatever else miners choose to mine might experience an increase in demand, which could lead to an increase in price, which could lead to increased ability to be used to purchase bitcoins, which ability if exercised could lead to increasing price of bitcoins...
-MarkM- (Hmm, how low would bitcoin price have to go in order for parting with some botcoin in return for some bitcoin to seem attractive?)
So we can have not just monolithically "miners" but a potential distinction between combinations of "miners who already mined some bitcoin" and "miners who might mine some bitcoin".
Miners who already mined some bitcoin might consider selling some bitcoin. Miners who might mine some bitcoin potentially / hypothetically might mine something else instead or as well.
If interest does turn out to follow mining to any extent and interest does turn out to lead to some demand to some extent then whatever else miners choose to mine might experience an increase in demand, which could lead to an increase in price, which could lead to increased ability to be used to purchase bitcoins, which ability if exercised could lead to increasing price of bitcoins...
-MarkM- (Hmm, how low would bitcoin price have to go in order for parting with some botcoin in return for some bitcoin to seem attractive?)
Yes, the number of bitcoin is increasing at an almost constant rate (for now), but not the price to produce them! Higher difficulty means the energy and effort to produce a bitcoin will be higher so miners will not sell it at a low price. Would you sell something you payed 10$ for 7$? I guess that's a no.
So if you paid $1000 for $100 worth of gold, would that make gold rise to $1000 soon so you could sell it or would it just make you stupid?
Mining bitcoins for $10 when the price is $7 will not drive the price up. This is a logically fallacy and you're conflating sunk costs into price. What you paid, you paid, you can't change that. Beyond that you will want to sell high and buy low just like anyone else. If you think $7 is low and it will eventually go to $10, then you hold on to it. If you think $7 is a peak, then you're a fool to hold on to it even though you're selling at a loss. Miners do not dictate the market and they do not even put pressure on market prices. Supply is supply, demand is demand.
Would I sell something I paid $10 for, for $7? That question requires more information. If I bought something worth $2 for $10, and someone stupid offered me $7 for it, I'd be stupid not to sell at a loss because the whole situation is stupid all around. When mining becomes too expensive miners will stop mining, not continue paying for bitcoins in the hopes that they can sell them higher than the current market rate! (Unless they believe price to increase dramatically in the future!)
The vast majority of the currency is held by miners. When they need the money, or are afraid they can't recoup costs. They will drop the market. I think we could easily see $15 again in the next week.
the vast majority of people into bitcoin have absolutely zero interest in mining other than checking to see if one pool has a near 50% share
It'll have no effect.
The amount of new bitcoins being produced is constant. The more miners on the network simply means more people fighting for those bitcoins.
Likewise, mining is survival of the fittest. Only those who mine most efficiently will survive. Eventually those who are mining at a loss will pull out. This will cause the difficulty to decrease and the most efficient miners will return to profitability. There is also the dynamic of future prices. Some people might mine at a loss hoping the price eventually goes up. However, there is no guarantee of that.
The amount of new bitcoins being produced is constant. The more miners on the network simply means more people fighting for those bitcoins.
Likewise, mining is survival of the fittest. Only those who mine most efficiently will survive. Eventually those who are mining at a loss will pull out. This will cause the difficulty to decrease and the most efficient miners will return to profitability. There is also the dynamic of future prices. Some people might mine at a loss hoping the price eventually goes up. However, there is no guarantee of that.
However, will the loss of miners cause a loss of interest in bitcoin so great that bitcoin price will actually fall?
Unlikely, because miners are much more likely to be selling bitcoins than buying them, so they don't account for much of the demand. But losing miners can't reduce the supply. So there's no effect on supply and no effect on demand.The theory would have to be that a reduction in miners will eventually reduce demand because miners are also evangelists who bring in people who don't mine. But I don't think that will happen. The rate of increase in participants may drop due to the loss of evangelists, but those on the demand side are also evangelizing.
If a loss of miners reduces the value of bitcoins, it would only be because a high rate of new bitcoin users was needed just to sustain the current value. If that's true, bitcoins were already unhealthy.
I don't think it was miners paying $30 per bitcoin. Someone else is interested.
sadly i dont think it was people wanting to buy bread and gas with BTC either.
Figure out what they do want to spend them on and profit???
Why don't you think people would want to buy gas with coins? If I had a car I would. I would certainly buy bread.
I wish there was a sticky note that said: "DIFFICULTY AND MINING COST DOES NOT AFFECT PRICE"
What do you mean "there are not new bitcoins coming into the market"?
Bitcoins come into the market at a constant rate, regardless of difficulty or mining cost. Unless everyone stopped mining right now, bitcoins will come in on average ~300 BTC an hour. And if everyone stopped, it would only affect the supply until the next difficulty change and then everything would be back to normal.
If you're sick of playing around with bitcoins I have a solution for you: 1LqdM8Rd52pE8evddzdeSFkoojqvTQTUdi
What do you mean "there are not new bitcoins coming into the market"?
Bitcoins come into the market at a constant rate, regardless of difficulty or mining cost. Unless everyone stopped mining right now, bitcoins will come in on average ~300 BTC an hour. And if everyone stopped, it would only affect the supply until the next difficulty change and then everything would be back to normal.
If you're sick of playing around with bitcoins I have a solution for you: 1LqdM8Rd52pE8evddzdeSFkoojqvTQTUdi
Yes, the number of bitcoin is increasing at an almost constant rate (for now), but not the price to produce them! Higher difficulty means the energy and effort to produce a bitcoin will be higher so miners will not sell it at a low price. Would you sell something you payed 10$ for 7$? I guess that's a no.
As you wrote, "if everyone stopped, it would only affect the supply until the next difficulty change and then everything would be back to normal." is wrong. If everyone stops the difficulty will not adjusts since the threshold of block needed will not be reached.
You may think that it will increase the price of bitcoin, since there are not new bitcoins coming to the market.
The amount of coins being produced is not related to the hashing power of the network. Jump to: