Bitcoin Forum

if the price drops, some people stop mining will the dificulty decrase as well, and thus be easier to mine for more coins per day.....bringing the market back up over time?

It's a perfect balance! Genius isn't it? :D

I don't follow. Why would it being easier to mine bring the market back up?

From what I see there seems to be a delay.  Even with the price of bitcoins dropping the miners are complaining that the difficulty is going way up right now.  The general understanding seems to be that with the latest buzz about bitcoin many people buy the equipment and start mining even when the difficulty of making bit coins goes way up and cost is prohibitive and little or no profit is possible.  So then you have to wait for those who are mining to give up and get out which takes awhile and then the difficulty will decrease.  Also some do mining just for the novelty of it and aren't that concerned about making a profit.  I was going to do mining just for that reason, just to see how it worked then I read this thread and thought maybe I should wait a while and pick up the stuff cheap on ebay.

http://forum.bitcoin.org/index.php?topic=20944.0

If it drops, there's a chance for a quick profit.  If not, that's the game.  Maybe time to find another investment.

Yeah, I had a post on another not bitcoin forum thread from a guy who ALMOST started to very seriously mine bitcoin six months ago when they were going for 30 cents each, but he didn't do it.  I wish I had run across this six months ago.  Probably would have seemed even more risky then though.  It says on wikipedia that about six million coin out of a total of 21 million have been mined so far.  So if bitcoin keeps growing, there's a lot of mining still to be done.  The people who developed this project must be multimillionaires
by now.  I read somewhere in the beginning one guy would go get pizzas for lunch for 10,000 bitcoin.

LOL i feel ya i just got wind of this i would have been doing it long ago if i knew of it.

well because less people will be doing it the price per coin will drop then because that happened the difficulty level we are on will also drop to stay with the 10 blocks per hour, day or some shit like that, so that it keeps being steady payout of bitcoins. then more will mine because it became a money maker again. so then the price per coin will climb again so horde those coins... they may one day be worth a million per coin. That is if all goes well.

Haha... thanks.

As far as i'm understood this "system", more mining power- higher diff... So basicaly, if mining power is limited (no more renting supercomputers to mine, etc..), difficulty would stagnate and price-per-coin will go up?

From my understanding of reading other threads on here.

The system works by aiming for 8 blocks per hour to be found. If there are more then that found the it raises the difficulty at the next interval. But if less were found it would lower it.

Selling all your coins will make the value of them drop but it depends who they are sold to. Since its demand and supply.
If every ones selling people will be willing to sell them for cheaper. If no ones selling then they will be harder to find and will have more value.

Yes, it is basic economics in two parts.

Supply/demand balance for bitcoins - more supply, lower price, and,
If the cost to produce is more than the value someone else is prepared to pay (now or future), production will be slowed.

As of now, the profit margin of GPU margin is far too high for people too stop mining. So once you've made the initial investment to set up the rig, it would take a very steep drop in price to make people stop mining. So it does not directly affect the price.

That's a very good point.  If you already have the hardware, the profit calculation is totally different than for someone just starting out.  Another reason there's a big lag between the amount of mining going on vs the price and difficulty.l

What happens if the NSA decides to trash the whole game by ramping up their super computers for a few weeks or months doing solo mining thus increasing the difficulty to impossible levels then dumps their coins on the market as well thus dropping the bottom out of the "value". This is where I see the flaw in the whole Bitcoin thing and that is any one person or Gov't could with enough resources totally trash the Bitcoin economy. Hell Warren Buffet could build a T/h minig operation with what he spends on two suits or dinner.

Yeah I was wondering why the difficulty hasent been dropping at any rate even though the price of BTC has dropped significantly after being at like 30$/BTC because of that damned Wired article.

I think if they did something like that people would notice it first.  They'd see the mining volume move way up and they'd see the wallet accounts the bitcoins were being sold from.  I think if they tried it, many like me would see it as a terrific buying opportunity.  They would be doing all that mining at a terrible loss and selling the bit coins at the same time which would be a great service to bitcoin.  Ultimately the purpose of bitcoin is to produce a viable currency for trading and buying- not mining and speculating.  They would just end up furthering that goal IMO.  Not that it wouldn't make things extremely volatile for a while, but volatility makes for profit opportunities too. At this point everybody expects volatility, if the coins were made legitimately (and they would be legitimate in you scenario) many people would just snatch them up and say YIPPEE!

Even if the NSA or a hacker with a big botnet do mining, it wouldn't change something. They will have the 50BTC for creating block each time they create a block. Where is the problem ?
At last there will be no more BTC create  (when the limit of 21MBTC will be raised) so the only reason to mine is the tax. Which is low. So few people will mine, so the difficult will decrease so many people will mine, so...
It's the invisible hand.
Mining today is a temporary situation until all the BTC are created. The 50BTC for each block is just a way to create ex nihilo BTC. It's unfair, but how could it be ?

Even if someone came along with the new 12Peta-flop computer (somewhere in japan), the difficulty changes so that six block per hour are generated (300 coins/hr) until half the coins are mined (Jan 2012).  The the reward drops to 25 coins per block, with difficulty again resetting each two weeks (?might be 10 days - can't be bothered looking it up) for the next four years and the cycle repeats.  These are basic rules of the game if you didn't know. 

Point is, a new super computer or any individual is not going to corner the bitcoin market.