Quote from: notme on July 03, 2013, 06:00:07 PM

Quote from: gmaki on July 03, 2013, 05:56:23 PM

Quote from: Stephen Gornick on July 03, 2013, 05:35:04 PM

Quote from: atlosas on July 03, 2013, 03:09:34 PM

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh).

You are making the classic mistake in thinking that in crypto coins that the cost of production has anything to do with the market price.

If there was no limit as to how many bitcoins could be mined, you would have a point. Production would increase, and the flood of additional bitcoins would suppress the exchange rate until mining no longer is lucrative -- and an equilibrium would be reached.

But with mining, difficulty adjusts and thus no matter how much additional mining capacity comes online, roughly the same amount of bitcoins are produced day after day.

So the amount of mining occurring (hashing capacity) doesn't drive the price, but instead is simply a reaction to price.

Because of how efficient ASIC mining hardware is, the cost of electricity is a trivially low percent of the mining revenue. This contrasts how with GPUs the cost of electricity does now (... or soon will) exceed the revenue.

So ASIC has (or will) demolished the profitability when mining using GPUs, but it has little to do with the exchange rate. (other than, perhaps, miners investing their coins to buy ASIC hardware, and in turn ASIC hardware vendors flooding the market with coins when cashing them out for R&D and manufacturing costs.)

When there is a delta (as there is right now) between price of BTC and cost to produce BTC then every new BTC created is effectively being purchased for less than market value, and as of right now for a fraction of market value. So it would stand to reason that the vast majority will be converted to $$ or other currency immediately upon creation.

It's like insiders caching in options on a normal stock, which drives price down.

This does in fact have a become a market mover to the downside if the overall volume is low enough, which it seems to be. Your statement would be true if the outside interest in BTC overwhelmed the miners influence but it doesn't seem like we are there yet.

It seems to me that other than the recent media fueled bubble, mining is THE primary factor in determining price.

I'm a miner. I don't sell my btc as soon as they are produced, and in fact, as a US citizen it would be illegal for me to do so without registering with FinCEN as a money transmitter. It stands to reason you are just making shit up.

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

Quote

A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter.

A: I agree with you, I am making things up. That's why I am posting in the "Speculation" forum. Isn't that what speculation is?
B: You are a miner. Does your mining activities account for a significant percentage of BTC produced? Greater than 5%? No? Than your anecdotal data is irrelevant
C: It is illegal to sell BTC for $$ in the US? I did not know that. If that is the case I may have to revise my prediction downward significantly. I know for sure I will never buy a single BTC if I could never legally sell it, and neither would any other US Citizen.
D; Speaking of the US, isn't bitcoin usage, and mining a worldwide endeavor? So what does the legality in the US have to do with BTC price as a whole?

In any event, yes I am speculating. The reason I am doing so is I am attempting to make a decision between buying, mining, or walking away. How else is one supposed to make that decision without speculating on the future value of the item one is interested in?