In my other thread someone suggested that since mining is a way many people first get into Bitcoin that an increase in the price of mining each coin could increase Bitcoin market price. I think its definitely a plausible theory. The steady flow of new investors who would normally buy equipment are instead going to buy Bitcoins directly as long as the market price is less than the price per Bitcoin from hardware manufacturers. The real question is whether most miners can afford to hold out for these high break even prices or whether they will sell early (or potentially hold for a long time to double their profits?). The price per BTC represents what price point a miner would have to sell at to make his money back (no profit).

So how much does it cost to mine one Bitcoin? Assuming a 76% increase in difficulty per month, .15$/kWh, and a 2% pool fee:

(I used mining.thegenesisblock.com for these estimates)


BFL Single SC

Power cost over 7 months: ~$280
Initial cost = ~$1300
Total cost over 7 months: ~$1580

For people who get their Single SC 60 GH/s tomorrow: They will mine about 18 coins over the next 7 months. Cost: ~$88 per Bitcoin.
For people who get their Single SC 60 GH/s at the beginning of October: They will mine about 10 Bitcoins over the next 7 months. Cost: ~$158 per Bitcoin.
For people who get their Single SC at the beginning of November: 5.6 Bitcoins mined over 7 months. Cost: ~$282 per Bitcoin.


Bitfury - 400GH/s

Power cost over 7 months = ~$280
Initial cost = ~$8000
Total cost over 7 months = ~$8,280

Delivery day October 1: 66 Bitcoins mined over next 7 months.  Cost: ~$126 per Bitcoin.
Delivery day Nov 1 = 37.5 coins generated over 7 months. Cost: ~$220 per Bitcoin


KnCminer - 400GH/s Jupiter

Power cost over 7 months = ~$490
Initial cost = ~$7000
Total cost over 7 months = ~$7490

Delivery October 1: 66 coins mined over 7 months. Cost: ~$114 per Bitcoin
Delivery Nov 1: 37.5 coins mined over 7 months. Cost: ~$200 per Bitcoin

HashFast - BabyJet

Power cost over 7 months: ~$259
Initial cost = ~$5600
Total cost over 7 months = ~$5859

Delivery Nov 1: 37.5 coins mined. Cost: ~$156.24 per Bitcoin
Delivery Dec 1: 21.3 coins mined over 7 months. Cost: ~$275 per Bitcoin

I wouldn't assume that people would decide to buy bitcoin in an "economic shitstorm". That's different from a weak/strong dollar. You see it on this forum all the time: people saying "only invest what you can afford to lose". That's good advice since its very hard to actually spend Bitcoin at the moment on everyday living expenses. It seems likely that an "economic shitstorm" would actually make most people hesitant to invest in Bitcoin since they have less money they could lose comfortably.


This is actually a great point. Thanks for that. Does anyone know the total amount invested in ASICS? It'd be hard to gauge the amount of new investors that buy mining equipment but the amount spent on ASICS should be fairly easily quantifiable.


That's certainly possible but the majority of network speed was sold to big orders (look at the orderbook distribution on bfl.ptz.ro for example). These are people who are investing and want to make a return on their investment. That requires selling coins. Hopefully people with that much money to spend can afford to hold their Bitcoins for a while and don't have to sell to pay their electricity. But BFL has delayed over a year for lots of early orderers who thought they would be getting a money printing machine and become filthy rich long long ago.

This is obviously a graph of the price of chickens in Romania. Magic 8 ball says buy chickens and sell in 3.5 months.

Ah yeah good point thanks. I was going off of TheGenesisBlock article that mentioned blocks being made every 5 mins. The point is really there will be an increase in supply.

There's several factors that will likely effect the price of Bitcoin in the near future.


The massive rate of increase of hashing power has made blocks be confirmed much faster than normal

Normal rate of block creation is one per 10 minutes. That means 3600 new Bitcoins are created per day normally, equalling about $400,000 per day at current prices.

With blocks being made much faster than that this source of new Bitcoins could drive prices down.

Likely effect on price:down


On the other side, difficulty rising means more $$ must be spent to mine each Bitcoin

Consider a Bitfury miner, one of the most cost efficient miners that can be purchased right now. http://mining.thegenesisblock.com/a/576b0ab173

If they deliver in october as expected buyers will not make a return on their investment at current prices.

The story is much the same for every other asic manufacturer (run the numbers yourself if you don't believe me).

Miners are going to have to hold onto their coins until the price rises to make a profit. However at least some of them are going to need to sell Bitcoins right away to pay their bills, so this likely will only reduce the rate of inflation caused by increased supply (rather than driving the price up)

Likely effect on price: up


Potential ending of quantitative easing by the federal reserve

See: http://www.bloomberg.com/news/2013-08-21/fomc-minutes-show-broad-support-for-bernanke-tapering-timeline.html

Quantitative easing is believed to have an upward effect on the price of gold because QE reduces public confidence in the dollar holding value. Ending QE will likely reduce demand for gold and other alternatives to the dollar.

http://www.forbes.com/sites/kitconews/2013/06/18/tds-eventual-qe-tapering-to-hurt-gold-potential-for-short-covering-into-september/

Higher confidence in the dollar holding its value means less demand for hedges like gold and Bitcoin.

Likely effect on price:down





I have to conclude the trend over the next few months will be downward. These definitely aren't the only variables that effect Bitcoin. I'm just trying to wrap my head around what the next few months will look like. If you've got any other suggestions for relevant factors please share.

Will Simon be verifying that your chips aren't a lie?

This could be a good thing or a bad thing depending on whether BFL is actually insolvent right now or not.

They could have run out of money and are trying to fund old pre-orders with new pre-order money. If that's the case I see prison cells in BFL mangers' futures since it's a blatantly ponzi-esque tactic that will collapse in on itself eventually.

However think about the people who ordered after the price of BFL units doubled. They will likely never see a return on investment on their order anyway so switching to the new product queue and being at the head of that line actually makes a ton of sense for them. This only holds true as long as BFL has enough money to stay afloat without dipping into future pre-order money to fund old pre-orders' production though.

With their history though I would certainly never pay for a pre-order in Bitcoin. For a product in hand that other people have recieved from a seller with no problem Bitcoin works great, but for a pre-order the lack of protection for buyers is very worrying.

Be wary of Hashfast. They only accept Bitcoin (so there's no chargeback if they don't deliver) and haven't proved anything about their product to be legitimate yet. Those things together make it seem very fishy.

I wish there wasn't so much hostility on the board between the community and Josh. We might be able to get more information about why things are taking so long without turning the discussion into personal attacks.

BFL has a huge interest in ramping their production up since if they can really clear the queue there's a ton more money to be made. I'm glad the Jalapenos and Little Singles are moving, but the rate of Singles is a bit concerning. Could we get some more info about why the production has been so uneven across the different models please?

I have to say it is definitely suspicious.

-No real proof that their product actually exists or works
-Payment in Bitcoin only so they can run with the money if they want to
-no proof that they are who they say they are
-if it's too good to be true it probably is (they're promising 28nm technology very very quickly)

I've heard of people still being able to cancel their order through PayPal. Until people are unable to do that I think calling BFL a scam might be premature. They've shipped quite a few units and the production seems to be getting faster (though they are admittedly far behind). Still the difficulty hasn't been rising too fast in the meantime so I think there's a good chance that many people will still get their orders in time to make money (as long as they didn't buy at double price).

The FTC rules are definitely on the side of the consumer here. I see nothing wrong with BFL taking a long time to ship unless they really stop giving refunds. With PayPal acting as the intermediary I think they are going to be forced to do so as long as the customer payed through PayPal. That's because their terms of service state that you aren't even technically allowed to sell a pre-order without being able to ship a product.

http://www.reuters.com/article/2013/08/06/us-court-sec-bitcoin-idUSBRE97517G20130806

The SEC will go after you for selling an unlicensed and unregistered investment instrument within the US regardless of the currency used. Here's a relevant quote:

Dacoinminister you might want to read this:

http://www.reuters.com/article/2013/08/06/us-court-sec-bitcoin-idUSBRE97517G20130806

The SEC seems to really dislike people offering unregistered and unlicensed investment vehicles in the US, regardless of whether it's bought in BTC or USD.

Here's a particularly relevant quote:

Wow dacoinminister you really are that thick that they had to spell it out over and over before you finally got what we were saying. D'aniel was basically describing what I was talking about. No wonder you didn't understand my post either.

It's impossible to reach parity with an asset simply by reinvesting the money from people who buy it. Do you dispute this?

If so where does the initial money come from? Why would anyone buy one considering there's nothing backing their purchase?

This is just assuming that the price of your assets will go up forever. There's never going to be enough currency in the escrow to achieve parity unless there's a large investment in the escrow from outside. Even if you did that, you'd slowly bleed money until parity was lost. When the escrow runs out of money and parity is lost, the whole thing collapses.

There's nothing subjective about this interpretation. I'm relying entirely on facts. The economics show such a lack of thought that I find it hard to believe he's ever taken even a high school economics class. He asks for money now for a coin that doesn't even exist yet and cannot possibly become valuable due to its reliance upon centralization. Even if it hypothetically had value he would then be in violation of multiple money laundering and investment laws since he's backing the whole thing with his "real identity" based in the US. He controls the "exodus address". I advise you to look a bit harder at this one and move it to "high" chance of being a scam.

This protocol is not decentralized. He's the only one who can create "mastercoins" according to his proposal. He hasn't released any source code. He's saying "Trust me to make this alt-coin eventually, here's my real life identity, I live in the USA!". That's the opposite of decentralization. Whether his centralized project plans to piggyback off the Blockchain is irrelevant.

Your example of Defense Distributed is not a good analogy. The creator of that project released his work for free to the public rather than trying to sell it. It's not illegal to create homemade firearms or firearm blueprints in the USA either. Exchanging money without following regulations definitely is and many people have been busted for it already.

If you sell for higher than market price there's no reason anyone would buy from you. By definition a "market price" implies that this is a well functioning market which requires there to be plenty of buyers and sellers (not just you). If others are selling the same asset as you but for 1% lower there's no reason anyone would ever buy from the escrow.

By the way where are you proposing this escrow even comes from? So far you've just proposed that money sent to the "exodus address" go directly to funding you, your wife, and your kids.

Right but people are inherently self interested in economics. They won't sell to the escrow unless they can make money from doing so. They won't buy from the escrow unless that also makes them money. So how does the escrow ever make any money unless people are willing to sell at a loss?

I certainly hope you aren't claiming to have changed the laws of economics and made people fundamentally not profit motivated?? Can you address this problem? How do you get people to sell at a loss (which is what is required for the escrow to gain money).