Bitcoin Forum

well
after careful thinking
it's my conclusion that most asics on the market will not ROI in bitcoins.
it's also quite apparent NOW once things are put in perspective that that noone will be getting ROI in fiat currency as well.
the daily bitcoin amount is limited and the amount of money (bitcoins and fiat) spent on getting a tiny portion of the pie is now insanely high.
this means that if miners are rational they will all STOP selling
otherwise they will be mining AND selling at a loss. they'd have to be either altruistic or stupid.
hence i believe in the next coming months most miners will HOLD their btc and not sell at current prices no matter what (unless they are about to be evicted or something)
nothing to do with any price movements or looking at trading patterns just stating obvious facts.
this will squeeze the supply and slowly drive prices up.

http://en.wikipedia.org/wiki/Cost-push_inflation (chodpaba called it)

yes,  that, thanks for bring about the correct term

That's not how it works.

If anything, miners will have to sell the BTC they mine to cover the costs of their expensive mining equipment.

I know I have charged the pre-orders I have on credit cards. I will sell the first few coins I mine to pay off those credit cards once those miners arrive.

Furthermore, no one will mine at a loss in the sense that the miners will make more BTC than it costs to run them. They may not make back their original investment but that is no reason to sit and hold the BTC. Since bitcoin can go both up and down and no one can predict which way it will go, you will make no more money if you sit and hold than if you sell right away.

It's BitPays venture capital money used to "not sell" the Bitcoins which were payment for the asics.

mgio, i don't think you understood my post or the financial implications you have signed up for by putting it on your credit card.
you should just cancel your preorder since it sounds like you don't actually understand what you signed up for.
in really easy terms: the money you spent on preorder on credit card will *never* be recovered at the current exchange rate.
this means you will NOT be able to pay off your credit card for this purchase AT ALL. hence what i mean by saying will not ROI  (return on investment). it's not like the first few mined coins will pay off your credit card and the rest will be icing on the cake.

what this means is that you are going into DEBT and will carry a portion of your balance with interest into the future until you somehow pay it off.
the only way you can "pay off" the credit card is if prices go UP..... by a lot.
don't worry pretty much EVERYONE is in the same boat - that's why i made this topic.

**** "first few coins" will never pay off the cost of hardware at current exchange rate- ever.
miners are better off "hoarding" their coins until prices go up to "pay off" their equipment.

I belive you are right. Yeah we can t predict the future but nobody will sell at loss so in a way miners are actually buying bitcoin at a price near 200 $ when they buy asic from bfl (including delay) or asicminer...

you got it :) except i'd be guessing that the price is much higher than $200 i think more than $400+ (just a guess)

And if they don't sell, the daily coin supply will shrink, the price will go up for sure

Here is a poll of miner's opinion, so far I can see that only part of the miners sell the coins immediately, most possibly those early ASIC owners who have already ROIed
https://bitcointalk.org/index.php?topic=296264.0

Why is the assumption that miners are jobless bums living in squalor?  Can't they make money working while their rigs mine?

Because they have heat stroke induced brain damage.

Actually the supply side is not a big problem, it will shrink no matter what, but the demand side is more difficult to estimate

The need for transaction is small, the purchase is mostly driven by long term investment. If bitcoin is allowed in the pension fond's investment portfolio, then the demand will rise fast, need some kind of breakthrough in wall street, but that will be tough

Savers like bitcoin, where are those savers?

based on my current  estimates miners are paying hefty price for their machines. no machine received in the last 2 months with ROI at current prices in fiat (def not in btc). currently the price miners have paid for their machines is at minimum $200! crazy irrational miners should've just held unto their coins or  bought more on their credit cards. i feel bad for those who have to pay off their credit cards

I spent over 50BTC on mining  in the cloud.

current hash rate: 0.00Gh/s

:'(

sorry to hear...
the bloodbath is about to start in the next 1/2 months. it'll be bloody

did you get a bfl mining contract or something?

couldhashing

I guess lots of pre-order money will start to be refunded (Through CC/paypal) and reach exchange later

And since the anecdotal evidence is that most miners are buying their mining rigs on credit, they will have to either repay or default on their credit cards. Unless all miners decide to just default on their credit repayment, that means they will be forced to sell BTC at less than the cost they paid to mine them, driving the cost DOWN.

I want to personally thank miners for doing this and providing cheap BTC for those of us who are simply buying!  ;D

doubt it, what's the point of only partially repaying off your credit card at all. they'll just make minimum payments and wait it out. only mgio here sounds like he wants to sell at a neverending loss :D

Is Thursday still the anticipated day for mining to begin?

yes

It took until July 2013 to get to .2 Phashes/second.  Last weekend, we added that capacity.

http://blockchain.info/charts/hash-rate?timespan=30days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

i'm sure everyone realizes that since difficulty keeps jumping by 30% each round that my prophecy is about to come to fruition. 
once this happens i'll be announcing my new religious movement for everyone to follow.

 Although that statement is agreeable for many people , don't forget many asic miner owners will want to cash out to cover expenses they spent on these hardwares , they may do that or not I am not sure, that may effect the market or not I am not sure about that neither , but there is that option as well.

my point is that cashing out now will NEVER cover their expenses to begin with. it'll barely cover a fourth of the cost now. the only thing that they would want to cover is electricity (should be cheap) and possible minimum payments if credit cards were used. otherwise, holding is the only thing that makes sense since cashing out to fiat now means they are losing money.

really simple example: you spent $10,000 to buy something.
in the first month it brought you back $1000
you are down $9000.
does cashing out that $1000 to cover the $10000 make sense?
it automatically puts you at a loss. a big one. so if people wait till the $1000 appreciates towards $10.000 they can at least hope to cover their losses.

people are in for big losses if they cash out from asics delivered since beginning of august.

I think you're making a big assumption.

There are miners that have been simply collecting coins they've minted and storing them for a rainy day.
Now that when they see their miners are no longer profitable, they'll want to recuperate their starting costs & some pocket change (at a minimum)
Sure, new miners will not be able to recover their investments... but there are thousands and thousands of already established miners waiting to pay off their investments.

They've already paid them off. your assumption is contradictory too - that those who were profitable have waited to sell and those who it will be mining at a loss will sell too instead of waiting.  there is also a lot more "new" miners than old ones by a huge order of magnitude.  Just wait and watch .

So you are betting on BTC increasing fast enough to outweigh the 20%+ interest being charged for not paying off the balance?

%
20% (kind of high- most credit cards should be less unless you have terrible history)  YEARLY interest...  100% yes
Some aren't borrowing money- and only 4% yearly interest if a equity line was used
anyways, bitcoin's value keeps rising at a pace that is much higher than credit cards charge. you are better off waiting and betting on the trend of 4 years then paying it all off at a loss regardless. it's really really common sense

edited - was typing off a tablet and those are a bitch to write off

I could have financed a rig at 3% per year with a credit card.  However, I paid for mine with bitcoins @ $180.

But nice try.

cool!

Take out a legal equity line.. That's what I actually meant

Since bitcoins were at 180 for only 2/3 days.  I wonder what you could have ordered at the time.  I'm pretty sure that you will not reach ROI even at 180. Unless you care to share

Depends on how you calculate ROI.  I spent 19 btc on 50 GH/s that should arrive in a week or two.  I will not ROI in BTC terms unless price craters and difficulty follows, but at the time, I was looking to reduce some direct price exposure.  Since I am completely unleveraged, I will likely ROI in USD terms if I am patient.  Electric costs are low, plus it is almost the time of year where heat is more valuable than electricity anyway.

you are looking to get about 3 btc from the 50ghs over it's life. 3btc at todays prices is about $400 usd. if you spent 19btc at $180  = $3420 is how much you spent in fiat and 19btc is how much you spent in bitcoins. the only way you can even reach ROI in fiat is if prices go up a lot. you are looking at btc/usd @$1000+ to get your money back. people would have been better off 'financially' not ordering or doing anything at all. don't worry pretty much all miners who ordered after may (and most bfl orders) are facing the same situation.

I don't put much faith in long term price or difficulty predictions, especially without visible rigor.  I am a long term supporter of cryptocurrency, but I have my long term holdings and I also spend btc on various goods and services.  Having a small stream of btc whenever I need heat seems like the best thing in the world when I'm cold.

lots of people are cancelling and sellers are opting out of traditional reversible payment methods.
btc garden is here too
the monster rises

Price is about to go down, due to bitfunder issue.

are you kidding me? bitfunder has very little to do with bitcoin prices and more to do with company (mostly mining) valuations.
i doubt if people sold shares for cheap on bitfunder that has any correlation with them "cashing out" of bitcoins

most of the time people sell for cheap is because they think the next person will sell for even less and they can buy more.

anyways, price has actually went up since yesterday.

edit: btct closed down and had 0 effect on price and it was much bigger volume than bitfunder

interesting, i guess bitfunder doesn't want to be deal with US regulation.

bitfunder create a lot of demand for bitcoin.

bad news all over yet prices continue to rise

wtf

Bad news out of established financial world is worse. So it's a speculative price rise.

That sounds interesting.Care to explain?

it is starting

It still amazes me that most people involved in bitcoin are not cognizant of the ramifications of a deflationary currency. In a deflationary currency the best decision when deciding to purchase anything is usually to decline to make the purchase. That is because whatever you intend to purchase will cost less next week than it does today, the exact opposite of an inflationary currency. The best strategy is almost always to be a hoarder.

If one assumes adoption of bitcoins will continue to increase, then the need for coins for transactions will increase. This is a constant price pressure.

Miners are not generally idiots. They must know at an instinctive level that a coin mined today will be worth more tomorrow.  It costs nothing to sit on a wallet full of coins, in fact, it is generally profitable to do so. In most cases there is no pressure for them to sell when they see daily increases in BTC value. "Why sell at $160 today when it will probably be $200 next month?" They all ask themselves this question every single day. Rather than sell their coins for more mining gear, they are far more likely to scrape together more fiat for purchases and hoard their appreciating bitcoins. This is a rational path for a rational actor.

The cost of ASIC hardware in part will always be a component of defining the price of bitcoins. "How much must I spend on hardware today to get 1 btc over the life of the hardware?" This question has as much to do with the price of btc as the need for transaction coins does. The difficulty level increases as factories churn out ASICs by the thousands will ensure that the answer to that question is "More than yesterday".

If we continue on the current path, the days of getting any daily or weekly return, even from a pool will be numbered. ASIC miners will be more akin to a lottery ticket model. Maybe your pool finds a block this week. Maybe it doesn't. Maybe you get lucky and get a few satoshis. Probably though, you won't. People will still buy ASIC miners, each Ghs a ticket for a possible payoff. Some folks will only buy one ticket. Others will buy thousands. In this environment, a single bitcoin could be worth tens of thousands of dollars. So in the end, i think the discussion as to whether miners will hoard or spend their coins is a transitory question that in another year may not even matter. Because most miners, like most lottery players, will be receiving essentially nothing for their investments. The winners will not be the clever, but rather the lucky.

It still amazes me that people over-sell the hoarding aspect of deflationary currencies. What you guys forget is that there's a difference between minimum spending and zero spending, and you consistently present an argument that doesn't take proper account of the difference between the two. ASIC miners are never going to be a neccesary big ticket purchase, but what about a car? Or the deposit for a home loan? Life insurance? Medical procedures? Emmigration fund? The hoard will take a backseat when it costs you a more important opportunity.

No one said there would be no spending. Just no spending of bitcoins. see http://en.wikipedia.org/wiki/Gresham's_law

Gresham's law would only apply if someone were artificially undervaluing bitcoin.

it's starting. look at the amount of miners complaining about their gear - it's exponentially going up.

You assume everyone will hoard. This is purely an assumption.

Everyone has a price. Some people sold at $1, some at $10, some at $100. Some people will sell at $200, some at $500, some at $1000. Some will sell at $2000, $5000 and up. As the price rises, the probability and perception of "expotential gains" decreases. At some point it is perceived to be better to spend bitcoin to gain the things you desire now over hoarding it for potential % increases in the future.

It is a process.

However, your deflationary argument is valid. But bitcoin as a store of value has always had more potential than as a currency.

To assume it will become a "major" currency is far more of a reach than assuming it will become  a "major" store of wealth.