Quote from: redwhitenblue on June 07, 2014, 03:42:06 AM

Quote from: ElOmmy on March 30, 2014, 05:16:15 PM

Hi all,
Given the recent flurry of posts on how bitcoin's value will keep on dropping, how does one think about the ever-increasing bitcoin hash rate?
http://blockchain.info/charts/hash-rate
http://blockchain.info/charts/hash-rate?timespan=60days&showDataPoints=true&daysAverageString=1&show_header=true&scale=0&address=

Looks like miners, the core backers and long-term investors in bitcoin, still have plenty of optimism left? And the current market is just speculators' short-term panic?

-ElOmmy

Over the long term, the long term price of BTC will affect the long term hashrate.

If over the long term the price of BTC will not cover the price of electricity then miners will stop mining.

If over the long term the price of BTC exceeds the cost of electricity (to run miners) then more people will be incentivized to purchase and run miners.

The most important aspect of the BTC price is that it sets the total mining rewards - the trend of mining reward to hash rate ends up being the more interesting trend than BTC price to hash rate. Right now the total mining rewards available per day are pretty huge and so will fund a lot of mining investments (this was written a couple of months ago):

http://hashingit.com/images/articles/20140403/hash-vs-reward.png

http://hashingit.com/analysis/11-the-rewards-for-a-bitcoin-miner