I know it's probably been priced in, but with the recent difficulty drop if your cost basis for mining a coin was $1.80 it is now less than $1.60.  From the pricing action on mtgox it sure looks like lots of people have just factored that into their decision of mine-and-hold vs pay for power and hardware.

Here's a snippet of code from a popular pool hopping piece of software:

#SET THESE
bclc_user  = "FSkyvM"
bclc_pass = "xndzEU"
mtred_user = 'scarium'
mtred_pass = 'x'
eligius_address = '1AofHmwVef5QkamCW6KqiD4cRqEcq5U7hZ'
btcguild_user = 'c00w_test'
btcguild_pass = 'x'
bitclockers_user = 'flargle'
bitclockers_pass = 'x'
mineco_user = 'c00w.test'
mineco_pass = 'x'
#REALLY

Those pools are currently being exploited via opportunistic mining.  How lucrative is this exploit?  Well, here is a quote from another site from a user of this script:

Today and yesterday were absolutely ridiculous. I add up everything manually to see what I earned for the day at midnight EST usually. Its not even midnight yet and I am already at 1.4962508 for the day. I should be getting .41 btc @ 690Mhash. Still 2.5 hours to go. At 2.45 BTC over the last 45 hours now.

Now I realize the theoretical opportunistic mining payout increase is only about 10% so the above may simply be variance and a whole heaping helping of luck.  But what could be happening here is a subtle interaction between "unexploitable" or pay-per-last-share pools and pay-per-share pools.  Hopping *into* a PPLS pool (e.g., eligius) at the end of the round is far more lucrative than hopping OUT of a PPS pool at 41.3%.  Since all pools switch on an announced solved block pretty much at once that could be exactly what happens when PPS pools are hopped at 41.3% to a PPLS pool.

Oh, and if you are mining in these pools you may consider running that opportunistic mining script to level the playing field and keep up with the top earners in those pools, just in case I'm right.

Looking at what happened to namecoin got me thinking about long term future of bitcoin.

The premise of bitcoin is it's worth mining even when there's nearly no profit in it because the win comes from hoarding most of your product and selling just enough to cover expenses.  Miners bank on rising difficulty and bitcoin deflation, in other words.

The exact opposite happened to namecoin.  As it became vastly more profitable to mine namecoins than buy them the amount of hashing power in that network grew by 400% overnight.  Difficulty went from 15k to 55k in about 2 days.  At that point it was no longer advantageous to mine namecoins, but the added risk remained so everyone shifted back to BTC.  The hashing power fell right back to what it was a week ago, and at the moment namecoin network is slogging along with about a 1 block/hour rate.  Difficulty should adjust down in about 3-4 more weeks at this rate.

Could that happen to bitcoins?  At some point it would be advantageous to turn off your rig for a month or two and let the patsies mine at $1/day.  Then the difficulty plunges, everyone dogpiles on and makes two weeks worth of coins in a day or two.  Turns off rigs, lets patsies mine for a month+... Repeat.

Could be a fun alternative to an 8 million difficulty and $100 btc price.

There are at least two entities who have critical pieces of data you do not.  And that is dwolla and mtgox.  Both of them have hard facts on amount of other currencies entering and leaving the trading pools, both over time and immediately.  Mtgox has precise figures on all currencies, and dwolla has a picture only of dollars -- however, they have that sooner.

Since neither of these entities is regulated in any way shape or form you may be trading against someone with a clear picture of trader sentiment while you have to wait while various patterns emerge on the chart.

In fact, it is doubly advantageous to mtgox vested interests to delay posting of new funds to accounts long enough to establish their own position in the market -- the swings in price could be magnified, and price swings cause more trading.

Might want to keep that in mind when choosing your target time frame, or evaluating day trading vs buy and hold.