Quote from: Lore on April 12, 2013, 05:29:40 AM

Quote from: lemonginger on April 12, 2013, 04:42:54 AM

For the millionth time in these forums. The price of BTC has absolutely nothing to do with the price of mining. The difficulty will adjust towards making mining a break-even venture. The difficulty rate lags the price due to the time it takes to bring miners on and offline. The price is solely determined by supply and demand.

You contradicted yourself in your own post... Let me help you out... In the PAST, the value of BTC has moved towards the point of making mining a break even venture as the difficulty level adjusts. Like every broker will tell you though, past performance is no guarantee future results.

Let me make this simpler for you, since you seem to be unable to understand basic things about how BTC works.

Let's say tomorrow the price of bitcoin falls to $10. Mining will be unprofitable at the current difficulty rate.Miners will come offline, the difficulty rate will fall, and it will tend towards making mining profitable for those with cheap power and/or large economies of scale. Overall, with a lag, the ROI of mining will tend towards the same point.

Let's say tomorrow a new type of processor is discovered that violates Moore's Law and makes mining super cheap. More miners come online. The difficulty rises, tends to make mining reach the same break even point, but has little-to-effect on the price/. Overall, with a lag, the ROI of mining will tend towards the same point.

To the extent that miners are "forced" to sell for fiat to buy new equipment or that they "sell for fiat" when mining is profitable but "hold" when it is unprofitable, sure mining effects the the supply and demand for bitcoin, but the overall supply and demand pretty much makes what miners are doing irrelevant, as miners are not some homogenous group doing the same thing anyway. Some are holding bitcoin, some trade for fiat daily, etc with.

Mining prices don't even affect the price of precious metals all that much, and there's no automatically adjusting difficulty rate for getting gold out of the ground. Bitcoins are extracted at a predictablew rate, no matter how many resources are thrown at it. Because of the difficulty algorithm, mining cost is simply a lagging indicator of price, not a driver of it.