Post
Topic
Board Economics
Re: Correlation Between Bitcoin Price and Difficulty
by
odolvlobo
on 05/12/2013, 23:27:44 UTC
I've thought about this also... I think the price of mining could be an anchor to the price of bitcoin.

Why would someone pay $10,000 or $20,000 for a single bitcoin if they can buy a mining rig for, say, $15,000 which will get them a bitcoin in, say 6 days. If a single bitcoin will really be worth $100,000 or so as some have claimed, wouldn't it be logical to think a mining rig for producing a bitcoin would have to be about the same price? And if that's true, how high would the difficulty be? How much power consumption are we talking about?

Am I missing something obvious?

The amount of newly mined bitcoins is a very small fraction of the total supply (3600 mined per day vs 187,000 traded per day), so it can't have any significant effect on price.

If you think that mining bitcoins is a cheaper way to get them, then I'll bet that you haven't looked at what's available and done the math. While it may be possible to buy mining equipment that will generate a profit, most people do not or can not.