Bitcoin Forum

My theory is that we haven´t seen the bottom yet. The price
continues to fall and the trading volume is still pretty high.

However, I think eventually the support for certain price levels will be huge.
Why do I think this will be the case?

In my opinion the main influencing factor is the cost of mining.

A few links that contain estimations of the current cost of mining a single Bitcoin:
https://www.benzinga.com/fintech/17/12/10932967/how-much-does-it-cost-to-mine-cryptocurrency

https://www.bloomberg.com/news/articles/2018-01-10/bitcoin-can-drop-50-and-china-s-miners-will-still-make-money

Besides, everyone should take into account that these estimates don´t include the enormous
investments in hardware that are necessary to even have a shot at mining a block successfully.
On top of that several big mining companies are based in countries where the breakeven price
is higher than for the Chinese miners.

The miners will eventually need to support the price at a level that still allows them to
mine Bitcoin profitably. They are heavily incentivized to do this, because they have invested
hundreds of millions of $ into mining equipment, bribes and other stuff.
There are several precedents where miners have propped up the Bitcoin price before and
they will do it again eventually, because the whole mining industry has grown so much.

Of course they won´t support the price at the current price level, because it could make sense
for some of the mining companies with a big warchest to first wait until some of their competitors
have gone bankrupt. But somewhere between 2500-3500 $ / BTC they will have to support the price
and they will do it successfully.

We won´t see Bitcoin below 1000 $ again, because the miners are heavily incentivized to prevent
this from happening and they have the money to do so.

Place your bids accordingly.

Bitcoin will fall below $1,000 because there aren't enough people out there who want to buy bitcoin who will keep it that high. Miners can be incentivized all they want, it doesn't matter unless there are buyers out there. Why would anyone buy bitcoin now when they have so many options of alt coins, and bitcoin has so many major problems with scalability? They certainly are not buying bitcoin as a store of value since it is clearly failing as a store of value, and they aren't buying bitcoin to spend it as a currency since sending it to someone else requires nosebleed fees and often multiple days of waiting.

Why is bitcoin worth anything more than a tiny, speculative market cap? $100 million would be generous IMO, putting the price per bitcoin around $60 per bitcoin. That is a very optimistic/bullish estimate for the real value of bitcoin and where the price could end up.

At 60$ per BTC Bitcoin would have a market cap of ~1 billion $ and not 100M $. You seem to have
made an error in your calculation.

Thank you for sharing your opinion.

Cost of mining a bitcoin is way higher than $60 so stop the FUD please :)

I don't even get the point of mining Bitcoin.  Except to make money.  Why does it even need to be mined?  Who said it did.  But I am only a newbie and don't understand anything. I don't think there is enough people to rush in and buy Bitcoin even at say 6.5k because there is no guarantee that it will go up any time soon.  Though it probably might a bit.  But a big fall is at least as much possible. 

Oh i know, i know.

Because you can't get a negative value, thus it's value cannot fall below 0 in any reference currency or asset.

I guess we're all save now!

The point is that with weak hands selling their coins like there is no tomorrow, the cost of mining has no meaning for the time being. Miners could support the price, but at what cost? It's a very important decision that they have to make, because they can continue supporting the price without any effect due to how people keep dumping the price down, or they use these funds to function as buffer till the market climbs back up again. I personally find the latter option more realistic. With how the price has been peaking at near $20,000 levels, they have made themselves a tremendous amount of money, where we also don't have to forget the massive fees they have earned due to how congested the network was. The price will bounce back up once the panic amongst noobs calms down. People act like this is going to be the end, while we last year were hovering around the $1000 level.  ::)

At least it's not built on debt like the $ or Euro ;)

And it's "safe" or "saved" .... not "save"

Now actually hodler sold out their bitcoins who are already in profit. Now its time to turn normal. Miners will start mining after chinese holdiay.
Also tethered margin traders sold out. so we are now in normal price miners will start to dump around 7k-8k level. So price will not rise more then 8k for a long time.
Maybe after halving price will again double and people will jump in the boat while price is rising.

I don't buy your argument. As long as they can keep their operation running at some level of profit at $1000 or lower, why wouldn't they. They can be buying up cheap coins at that price like all the smart money and then wait for the next halving to start the next pump. Keep in mind that people were making the same arguments that it would never hit $200 (which was around a "cost per bitcoin" price at the time) after the 2013 ATH.. And it did.. And it stayed in that range for many months.

Something else to keep in mind regarding that cost per bitcoin. My calculations are already lower than that. In addition, as the price of bitcoin drops, more miners will shut off their equipment and/or move to other coins and so the cost per bitcoin will continue to drop. Same thing happened before and there's really nothing new here including "bad news out of china" after an ATH.

Theres no such thing as a cost of production for bitcoin. The bitcoin difficult is adjusted every 10 minutes to account for network competition. Mining doesnt affect price - other way around.

That's like saying that there is no cost for mining gold or other valuables because the price is determined when you sell it.
Sounds a bit like Schrodingers Cat.

Current Bitcoin difficulty and available mining gear does represent the cost of a Bitcoin.

Nice theory...  Here's mine.  We know that BTC has become a 'stone in the bankers' shoe', meaning it has become too disruptive, annoying and unpredictable.  We also know that they are the 'masters of the universe', meaning they have the political power, the money and everything else they need to take something down if they truly wanted it to happen.

And based on what you said about the costs of mining, what you see as strength, I see an attack vector.  What if all the world's bankers are starting to work together to crash BTC and keep the price down long enough to bankrupt the miners out of business and discourage anyone from mining it again?

I think this is where the CPU and GPU mined coins will find its strength.  *cough* Monero *cough*  ;D

Perhaps, but once new mining hardware has been put into operation and new power lease deals have been struck (often 6-12 months in advance), miners are reluctant to turn off mining rigs in response to a falling price, which in turn keeps the hashrate up.

So they would rather withold newly minted coins in order to restrict supply, thin the exchange floats, and thus get a better price. Which keeps their ROI up and thus the price up.

No the price of mining gold is pretty fixed. You have tractors and digging and labor etc. and it's always the same regardless of the price of gold. The cost of mining gold is not a variable in a computer. You absolutely need a certain amount of money to mine gold regardless of how many people are mining gold. With bitcoin, on the other hand, if all the other miners except you stopped mining, then the cost of mining bitcoins would be 0 for  you.

i am no expert in mining but just as an example i remember reading that litecoin changed to Scrypt to prevent ASIC mining. but it has ASICs for LTC now!
there is also a common saying that goes "there is no ASIC resistance"!

and on top of it, what is CPU, GPU mining? can't someone just create a new ASIC for mining these coins? the fact that nobody has bothered to do it yet only means that there were no market for it.
i don't see it as strength. i see it as something that has not yet been put to test.

Cost of mining is, at a bare minimum, your electricity. So no, not 0.

Bitcoin is annoying and disruptive.... It's a disruptor, redefining economics making bankers scared since they cannot influence it.
If bankers are the master of the universe why is the Dow Jones down the rabbit hole at the moment?

Let's say they want to stop Bitcoin mining with all their political power they would need to
- Ban hardware (GPU/CPU/ASICs/Transistors)
- Ban internet

Further more they would need to do a global attack on Bitcoin, since any country banning Bitcoin would make citizens move elsewhere where they are welcomed.

I don't see all the worlds bankers working together .... hey a purple unicorn  :-*


PS: I also have Monero ;-)

If you missed Fluffypony's interview, he already said that if somebody attempted to develop an ASIC for Monero, their team would break it.  And he said it really confidently too.


All they need to do is to ban the exchanges or make it very hard enough for ordinary people like you and me to trade BTC.  

And about the DOW, didn't it occur to you that they're making money in up or down markets, and didn't it also occur to you that they are the pin that burst bubbles?

They've been around for centuries, they've bankrolled wars all over the world and elected people in positions of power.  Don't tell me they're going down just because of Bitcoin.  Rofl.  How naive you are.

The bankers will regulate the sh*t out of crypto, ruin it and strangle everything we love about it.

Its essentially 0. If youre the only one mining then difficulty levels would approach 0 and no matter how much power you used every 10 minutes you would get 12.5 bitcoins. You could be using 1hz or your cpu on your ipad, and your cost of mining one bitcoin is 1 cent. I dont think you can describe any kind of similar situation with gold - its strictly a feature of the bitcoin protocol in which bitcoin will survive and work exactly the same way no matter how many miners there are. Oh and some places have free power, but thats beside the point.

I realize you're trying to create scenarios that are far from the reality of the situation so you can justify your position, but there is a cost to produce bitcoin. Electricity is just one thing. You have your "labour" costs. ROI of your equipment, replacement costs yada yada yada yada. Yes, you can put together a scenario and claim that means it's zero, but that's not reality. I could play the same game you're doing and make the argument that it would cost me nothing to go out and mine some gold.

Well if some geologist finds a gigantic gold-pocket of 1B tons on some mountain terrain .....
If alternative materials are developed that are non-corrosive and have good electrical properties ....

At some point in the past the value of pepper was sky-high .... now every person has it in their kitchen.

All prices adjust....

Your argument is invalid :)

as much as i'd love to, i don't follow these stuff. but that makes sense.
i know that one of the ways of fighting with ASICs is to change algorithm often so that the hardware becomes obsolete.

The cost of mining is something bears dont take into account. Thats why we dont take them seriously. If they would be a bit reasonable about their predictions, we would listen more to them. The only bear which I think was realistic was sgbett, his prediction of a bottom is exact the same cost of mining, around $4100. We want more bears like that, that can call the bottom without doomsday predictions.

Of course, the difficult can be adjusted so that mining spend less energy, but this would attract more miners, which would increase the price again due to demand. So, even if it fall to $2500, it would be temporary, and I would consider that the "despair phase" of the elliot wave chart, the "return to the mean" being $4100.

I just sold a small fraction yesterday and put a buy order around that price. Maybe with I getting one for the team, the price will rise. I hope it does, at least starting from 16 february.

Changing the consensus algorithm from time to time may be able
to prevent ASICs from being used. However, it has several disadvantages.

What happens if you switch to an algorithm that is flawed in some way?
This could destroy the trust in the project and trust definitely is essential
for the success of any cryptocurrency.

There is not an unlimited amount of algorithms that you can use, which
would make it a cat-and-mouse game between developers and miners.
Due to the potentially large gains every miner is heavily incentivized to use
ASICs in order to increase the profit of his mining operations.

Regarding the BTC price:
So far the Bitcoin price is far away from the levels where miners would need
to prop up the price. As I already said I´m still confident that we will
never see 1000 $ / BTC again.

If the returns from finding a block drop below the cost of mining, then miners will turn to another coin, or only accept transactions with high fees. This may be an outcome that the deep state would want to create, so it could be worth their while to depress the price of Bitcoin.

This may be possible when you switch from mining one altcoin to another.
However, I´d argue that it is impossible if you switch from mining Bitcoin to
mining an altcoin for two reasons:

1. Bitcoin mining is only really possible usings ASICs these days and most altcoins can´t be mined
using these ASICs
2. The professional miners have a lot of hardware (=hashrate), switching to a different coin
would immediately destroy the profitability of mining the different coin

Only a high-market cap coin with a lot of active hashpower can absorb the kind of computing
power that goes into mining Bitcoin.

E.g. if you would switch from mining BTC to mining a random proof-of-work altcoin
you can´t switch thousands of ASICs without increasing the hashrate of the altcoin mining
by a magnitude, which would make it unprofitable.

Surely you could switch some of the rigs though.

Miners definetely lobbying their interests among the bitcoin community but the mining cost doesn't realy have such a great impact on the BTC demand and price. Then why can't we just somehow increase the mining costs to make Bitcoin moon again? Or why BTC did not became cheaper after people started mining on ASICs with a higher hashrate then gpu (literally made mining cheaper)? Bitcoin is not falling below some points mostly because the support level is forming on the charts that is determined by market psychology. BTC priced is formed by the market, if you produce something in real life and determine the price for the product it doesn't mean thet customer will have the same evaluation of this price.

If you think that bitcoin is already a speculative bubble, then why don't you think that altcoins are even more so?

I'll tell you this for sure. There are way more altcoins that are in a much larger speculative bubble compared to bitcoin. And they don't have the answer to scalability either. At least all altcoins that I know of, how a flaw one way or another.

Also, ask around on the forum, how many people think that this current price level, nearing $10k, is a good time to buy. Let alone $1k which I wish we could return to at the moment so that I can stock up on coins.

$60 is ridiculous. And you saying that miners have no impact on the network is more ridiculous.

Well they've tried. Fuds everywhere timed with the correction made the price drop by more than 50%. I don't see anything that can make the price plunge any further than the support we bounced back from close to 5k. A few more dips probably but i feel confident we've seen the worst for now

yes this is right the price will never go dip because there are still bitcoin miners nowadays, so even we panic selling the bitcoin will stop on its bottom because of some miners. and it will never go dip like our thought., so perhaps the bottom is 7k . And I think it will never decrease more because of the demand from the miners.  

At some point, the price will get low enough that more buyers will enter the market than sellers. Bitcoin may already be at or near that point. Another thing that helps keep the price up is that there were a lot of buyers above $15,000. They will see $8000 as a cheap price compared to what they already paid for Bitcoin last year. These newer investors weren’t around when the price was $1000.

We get it, you do not like bitcoin, but what makes you think that is going to make any altcoin more valuable, when most coins are just cheap copies of the original, most coins claiming to have a better technology are just hyping their coins and nothing more, if bitcoin dropped that much in price most altcoins will drop even more besides if you were right the price will not be as high as it is now.

Update:
Secretive Chinese bitcoin mining company may have made as much money as Nvidia last year (https://www.cnbc.com/2018/02/23/secretive-chinese-bitcoin-mining-company-may-have-made-as-much-money-as-nvidia-last-year.html)


This is a new CNBC article that shares this estimate of how much money Bitmain has made in 2017.
Now remember that 10-20M $ are enough to prop up the BTC price temporarily and you can see
that they have a huge warchest to do whatever is necessary to keep up the price. And this is only
a single company that is not even only a mining company nowadays.

If you think they will just let their business that generates 3-4 billion $ / year in profits fail and close their operations
you are completely delusional.

Bitcoin won´t fall below the average cost of mining a single Bitcoin and everyone who makes predictions
like BTC at 1000 $ or lower doesn´t understand the incentives in play here.

Somehow missed this, I see you made this post a couple of weeks back. Now, I've always felt that miners play at least a small role in propping up Bitcoin prices - at least in the very act of selling the bitcoins they generate. If the overhead calculations are correct, then they would need to put up more than half of the coins they generate on the market for selling daily. I suspect that this is a lot less - a lot of other factors aren't taken into account (BTC isn't also the only coin mined).

But temper this: last year, when the price really rose, was also the year that saw a lot of new entrants into the mining industry - major players like Bitmain are not increasing, but losing their majority hashpower. They can't do much on their own ($20m is as you say only a temporary measure and this warchest is not liquid) and we've seen even post NYA that miners actually aren't the collective force we thought they might be.