The incentive is to ensure that the transactions you send to others and perhaps more importantly, those you are receiving, are processed quickly, correctly, and efficiently. That is the only incentive required in my view. In the future, most of the mining will be done by those with the greatest vested interest in the system itself - i.e those with profitable businesses that require the bitcoin system to function efficiently as a means of payment.

They won't care about mining at break-even, or even at a loss, when they are making plenty of profit from their individual bitcoin enterprises. Do you think banks and huge corporations require their computer and telecommunication systems to have zero depreciation, or indeed appreciation? They count these expenses as operating costs, and bitcoin mining will be no different. It is a cost of doing business, and it will be minimized like every other expense.

Inefficient miners will probably be priced out to the point where even the most efficient miners will be operating at levels barely above break-even. They might even eventually require subsidy from the bitcoin economy to pay for upkeep of the infrastructure, and since most individuals are profit hungry, their work will likely end up being done by those businesses themselves for a fraction of the cost. That is the only way to ensure mining is done as efficiently as is possible.


No I wouldn't. But if traveling there and back was the only work I actually had to do, and if I had no other obligations, I may just go along for the ride. If I liked driving enough, I'd be more than willing for someone else to pay for my pastime. I might even net a few bucks if I could find a gas station selling cheap fuel. At least until I realized what a waste of resources the whole venture was, and started to feel a bit guilty about the environment.

Unless I'm mistaken, 7 weeks of of continuous upwards movement is the longest rally, if not the largest in terms of price, I have seen to date.

My surfboard is in the shop. It's getting a reality check.
Don't worry, I'll be on your side again soon... when the price is right.

I don't want them for $5. I want them for quite a bit less actually.

The fact that you are making profit from mining at all underlines another fact - that the price is currently overvalued.
I'm not you, but if I were, I would take my profits now and buy back later when the euphoria has worn off.


True, and that is exactly why the price is so easy to manipulate right now. But rationality always wins out in the end.

Triple post I know, my apologies. But I have an addendum:

Bitcoin is a fantastic, world-changing technology. But a few people are getting WAY ahead of themselves. The price of a bitcoin cannot be supported by wishes and dreams. In the end, the market will decide a price that is reflective of the underlying bitcoin economy. Bitcoin can be used as a viable trade medium at any price, granted, but at the same time it will not, and cannot, be held artificially afloat for long.

At an exchange rate of $5, $36,000 of new money must enter the marketplace every single day (including weekends) in order to support this price, let alone drive it further. That is $252,000 worth of brand spanking new fiat entering the system every week just to sustain the current price at a fundamental level. Does anyone think that we are truly seeing investments of this magnitude?

Almost forgot todays chart updates. Supplies are indeed increasing:

Yes, miners have continued to mine and one of the points I was trying to make is that the data would seem to show that many of these coins have been held off the markets, considering the large divergence between total supply and the supply levels on MtGox - to the tune of almost 250,000 btc. Now that the price has risen, I would expect at least some of these coins to show up soon.


Believe me... I have looked at every chart you can imagine and came up with a few of my own too. Yep, it has been a pretty strong month, but we all know what follows strong rallies and we also know that logarithmic advancements are unsustainable.

I am not trying to predict anything about the uptrend, other than trying to illustrate the fact that there is persistently more selling going on than buying and highlighting the stark divergence of supply on mtgox to the total number of bitcoin in existence. I don't have the data from the beginning of the rally, but this is behavior that occurs at the top of a peak, not the bottom.

Notice that falls have been sharply and abruptly corrected over the past few weeks, even sometimes in contradiction of the RSI and MCAD indicators which then turn out strangely kinked. I know that these indicators are of questionable value in a market as small as this, but despite that, many people still rely on them to make their trading decisions.


You have indeed said it, manipulation has a limit and there is only so long that market participants can be hoodwinked before it becomes too costly to continue. I think we are reaching that limit (if we have not already) and am seeing many signals of an overbought market. What is the point of waiting until a fall back to 4.2 to act? The whole point is to try and assess the status of the market in advance of large movements. I prematurely sold at $4.3, but had still made 95% profit on my trade so was happy to exit at that point.

As I have already said, buyers are currently being fleeced at $5 prices. I don't have any inside information to back up my claim of manipulation, but considering what has been going on over the past 6 months, I don't think any of us are in any doubt that it is occurring. I think the $2.20 support is going to be re-tested over the coming weeks because despite the slow and steady uptrend over the past month, I think has been largely unconvincing and it could easily represent a change in manipulative strategy rather than true growth. If it has been true growth, what exactly is it that has been driving it? Nothing has changed as far as I can see. I think we all need the assurance of a bottom before the price can rise much further.

I'm glad to see that sense is finally emerging on the issue of bitcoinica!

Ahem...
We still have a ways to fall yet.

Then why do you feel the need to try and bolster opinion with posts like this, and:

Yep. That was an epic fail. But I wouldn't presume to try and predict crazy moves like that in the short term.
The bulls are losing steam, though, I can feel it. And the data is confirming it.

Down. https://bitcointalk.org/index.php?topic=56110.msg671310#msg671310

I will, once the price is a little more realistic again! If I bought now, I'd just be giving my money directly to you, then be on the losing side once again when the price falls. I won't say it's not torture, but I made 95% profit already, and I'm happy with that. I'll wait, I have faith in the data...  

Supplies on MtGox will be increasing from today onwards, I'll wager.



You can see that on the 31st, the daily bid (buying) volume briefly exceeded the ask (selling) volume, but it immediately went straight back to the way it has been for days with the asks greatly exceeding the bids. I honestly cannot understand why so many of you people are buying when it is clear as day that there is some major cashing out going on at overinflated prices.

Buyers are getting absolutely fleeced at the moment. If you would all just have a little patience, you will get these coins for MUCH cheaper very soon.

Because everything that happens in movies is real...  
I for one am a huge proponent of Ray Kurzweil's theories on the singularity.

The divergence is back to being huge again:



@old_engineer: I don't think the money was necessarily new, it could have just as easily come have come from off the order books on mtgox, or from bitcoinica. There is no way to know for sure if it is new money or not.

@Blitzboom: I don't know about you, but I know that I am making a decent income from my bitcoin business.

I don't get the joke...

I'll wait a few days and eat my hat if I am wrong. I don't have a problem with being proved wrong. Anything that strengthens the bitcoin economy is good, even if I have made a balls of my trading decisions. There is nothing stopping me from buying back in, but I still think my data will be proved correct at least to some extent. This could well be the last push. The only thing I wish is that I had waited a little longer.

I meant I was waiting for something to happen.

I know. That was my poll thread actually.