Quote from: Silvas on August 30, 2013, 03:31:48 AM

Quote from: Inaba on August 29, 2013, 12:11:30 AM

Quote from: Jutarul on August 28, 2013, 11:59:22 PM

Quote from: Inaba on August 28, 2013, 11:16:16 PM

This is a completely disingenuous market that is predicated on completely ludicrous assumptions. Lets look at a few of them, but this list is by no means comprehensive:

Mining has different market dynamics than you'd like to make people believe. In mining the product is money or a money substitute itself. Thus miners are generally interested in increasing their purchasing power within the money system itself.

Put another way: A miner becomes by definition the issuer of the currency and benefits from the ongoing inflation because they get the new money first before the market can price in the inflation or the mining costs are generally lower than the mining revenue. He thus operates CONDITIONAL on the assumption that the purchasing power of the mined asset increases, stays the same or inflates slower than the expected incoming cash flow. If I would expect the mined asset price to fall, I would NOT buy hardware in the first place, but hedge my asset position by selling them for something else.

Thus, mining investments are similar to doubling down on an appreciation of the mined asset. The miner accepts a certain degree of risk and capital expenditure for the prospect of getting that capital back. If I expect the capital expenditure to outsize the mining revenue, I wouldn't do the investment in the first place. That simply doesn't make any economic sense.

You clearly do not understand the motivations of the vast majority of miners, then. This may be your way of thinking, but I assure you beyond any shadow of a doubt, most miners are in it to make a profit in USD (or their local currency) not to "increase their purchasing power within the money system itself." Most miners couldn't give a shit about how much BTC it makes in the end, they just want to know how much USD (or local currency) it makes.

Once again, I challenge you:

Ask an average miner which they'd rather do:

Purchase a widget that costs 10 BTC and will generate 400 BTC, valued at $2 each or
Purchase a widget that costs 10 BTC and will generate 5 BTC, valued at $200 each

Invariably, the answer will be the second option, even though that person could have increased their BTC holdings by 40x! Very few people want BTC for BTC sake, they want BTC for what value it provides in their local currency. Again, you may be different, but you are in a very tiny, miniscule minority.

Actually, anyone who takes the 10 BTC widget that generates 5 BTC valued at $200 each is ~~a short sighted fucking moron,~~ chasing short term gains over long term advantage. Edit: not necessarily a moron, the possibility exists that their strategy is short term gains on purpose. To each their own.
Simply put:
5 BTC valued at $200 each = $1000, but for each $1 BTC goes up in the future they only gain $5 of value, and has a LOT of room for downward price movement.
400 BTC valued at $200 each = $800, $200 less at the time of calculation, but for each $1 BTC goes up in the future they gain $400 of value, and very little room for downward price movement.

You may well be right, and most miners may well choose the 5 BTC/$200 value, but they're ~~fucking retarded~~ likely cheating themselves if they do.
The 400 BTC/$2 value has far more upside potential and reward, and less downside risk. It's the obvious choice if profit is the motivator.

While the numbers are exaggerated, a widget that costs a small amount compared to what it would bring in has already been created. It's called an ASIC. At the time pre-orders were taken, the smallest unit cost less than 30BTC, and if ONLY 1 was made and there was NO competition, it would have brought in more than 400BTC in 12 months. Therein lies the rub... there will be competition and no one will make just one.

If we step into fantasy world though, we now have every unit capable of making such incredible returns... the ~4600 BTC for every mini-rig becomes 61,333. The network increase since those preorders is now at over 600TH. That's 400 minirigs. That would mean 24,533,200 BTC would have been produced in a single year and if we went to Inaba's farcical numbers that would be well over 72million. In less than 4 months at todays rate the entire BTC supply would have been exhausted.

THIS is the problem with your "I'd take the 400 BTC!" and the reason why the difficulty is so high today... since EVERYONE wanted the 400 BTC... no one can have it.