Quote from: nanobrain on October 05, 2014, 02:59:02 AM

Quote from: adamstgBit on October 05, 2014, 02:43:10 AM

Quote from: nanobrain on October 05, 2014, 02:40:21 AM

Quote from: phoenix1 on October 05, 2014, 01:56:55 AM

Quote from: nanobrain on October 05, 2014, 01:48:13 AM

Quote from: phoenix1 on October 05, 2014, 01:17:17 AM

Quote from: nanobrain on October 05, 2014, 01:05:27 AM

Quote from: phoenix1 on October 04, 2014, 11:54:33 PM

One problem I have with this is the assumption that big miners are in it for BTC and not fiat. I don't know everyone's motives but I am sure that for some it is an opportunistic business model (ie buy ASIC's, mine, sell, profit). As such what gives is price and it's a race to the bottom in terms of who has the cheapest electricity. Hardware is a sunk cost now, so it makes sense to continue to mine as long as your electicity costs less than than you can sell the BTC for, even if that means just minimising losses (on sunk costs), for all those miners whose goal is not to accumulate BTC.

We hear many times that miners will just hoard or switch off and buy instead. IMO only those that are true believers and not in it for fiat will do so. The rest will get what they can out of their equipment while they can. Many a bad investment decision has been made in the past and will be in the future in many industries. Why this mythical illusion that BTC is so different?

It looks very much like mining bubble to me

EDIT : In conclusion is it not a perfectly reasonable proposition that difficulty could nosedive to match current price as inefficient miners who are in it for fiat simply switch off their hardware at some point and exit the game or wait for their equipment to become profitable again, if ever? The assumption that they will simply buy BTC instead seems deeply flawed. Meanwhile the BTC inflation rate (supply) will remain constant. In the absence of new demand where does price go ?

I agree that the idea that miners 'start buying' is deeply flawed but when mining becomes unprofitable they will stop mining, supply will be reduced and the price will stabilise. Is this not part of the big "Satoshi Plan" of checks and balances for the functioning of BTC anyway; at the moment we have a confluence of negative factors: too much supply and negative sentiment due to Gox, Neo et al.

When the miners stop the flow of coins the price will find equilibrium and sentiment will return with a stable price.

Simples.

No ... until the next halving, supply is a constant no matter how many miners mine or what the hash rate is. The unprofitable miners will stop mining, maybe, but that has no effect on the BTC inflation/emission rate, which remains a constant until the next halving regardless of how many miners there are. Whatever the hash rate, the same number of BTC will be mined in the same time (excluding small variance between difficulty adjustments). This is a fundamental part of the BTC protocol - the emission rate is a constant until the 'halvings'

Supply is fixed in this equation, re how many BTC are mined. The variables are difficulty and hash rate, but these have no effect on supply, just on profitability of miners.

If every other miner shut down and you and I could mine the (approx) 3600 BTC per day on laptops once the difficulty rapidly adjusted downwards.

Sure, the network would be massively open to a 51% attack, but I am taking it to en extreme to demonstrate what I believe is a poorly understood function of the BTC supply/demand equilibrium

We'd better get the entire 21M of the buggers mined then and get things simplified then.

And therein lies the problem ... the emission rate is mapped out in advance and an intrinsic part of the protocol ... no way to speed it up without a hard fork. Actually, speeding it up would make things worse right now. Hence the focus on the block reward halving in 2016 (from 25 to 12.5 BTC per block I believe) as a catalyst for the next rally ... LESS SUPPLY !!

Well then, we're screwed. If these big mining operations don't believe BTC is worth anything as an investment and simply want quick USD profits (or as has been suggested are using it as a way of getting funds out of China) then we are going to have an over-supply which will lead to even lower prices and even fewer people buying or using. Another year of this and I can't see there being any positive sentiment around BTC.

you think all the bitcoin market put together can't handle 25 BTC every ten mins?

speculation is the thing that makes all these other things completely irrelevant to price.

Clearly it can't.

Pretty much everything is irrelevant to you with regard to BTC Adam, and while I'm very happy you have such great faith in it, its important to realise that most people clearly have the inverse opinion.

I recall Jorge made a prediction long, long ago that as BTC dwindled in price the market would comprise of fewer and fewer adherents, desperately selling back and forth to each other. That is what seems to be happening at present: there are no new buyers.

the simple truth is bitcoin becomes widely accepted, some kind of new "gold standard" "global reserve currency", then i'm right, pretty much everything is irrelevant.

the market will start to turn over 10% of it supply daily and price will be rock solid and boring as fuck.