On cex.io, what drives the GHS price?

[villaBTC]

I'm looking into buying some GH/S on CEX.io to start mining.  I see that GH/S are traded on an exchange and the current price is around 0.046 btc/GHS.  But what drives the price up and down?  With stocks, I understand that the price goes up when there are more buyers than sellers and goes down on the opposite.  And people buy when they think the value of the company will go up.  Stocks typically go up when companies have good earnings, are upgraded, are acquired by another company, etc.

But what factors cause GHS prices to go up and down?  What events prompt more buying than selling?  What events would crash the GHS market?  Is there any correlation with the price of bitcoins?  I don't want to buy GHS without knowing some basic fundamentals on what drives that market.

From where I stand, GHS is processing power and that is something that has always gotten cheaper over time.  Should we expect the same type of movement with GH/S?  It might fluctuate in the short term, but shouldn't its value steadily decline?

[Darkster]

I'm having the same question.
I see the value slowly increases and then boom, a crash and people in the "chat" seem to know when and why it's crashing so fast some times but I really don't understand it... blocks get harder to find so people want more GHS / power to mine I expect but the opposite looks true, it gets harder and people start dropping GHS/ses, while the GHS mine not only for BTC so can someone explain this behaviour?

[Olly_K]

demand

[villaBTC]

demand

That makes sense.  But then the follow up is what events drive up demand?  Or is this done on a purely technical level where GH/S reach a price that many people find acceptable causing many people to buy and that drives the price back up?  Or do things like news releases, new mining technology, etc. tend to influence price or is it just noise?  Maybe I'm just taking too much of a stock trading approach to this and it really doesn't apply to the GHS market.

[msc]

Maybe I'm just taking too much of a stock trading approach to this and it really doesn't apply to the GHS market.

I believe GHS prices should always drop in the long run, as equipment becomes more common, and the difficulty rises.  So I would be very careful of buying GHS that you plan to sell later.  But, there could be short term fluctuations based on changes in demand.  For example, maybe it takes a month to get a new miner and fire it up, but there could be lots of people who want to pay a premium to start mining today.  Cloudhashing.com has had large fluctuations in price for that reason.

[odolvlobo]

demand

Demand based on ignorance.

[Darkster]

Maybe I'm just taking too much of a stock trading approach to this and it really doesn't apply to the GHS market.

I believe GHS prices should always drop in the long run, as equipment becomes more common, and the difficulty rises.  So I would be very careful of buying GHS that you plan to sell later.  But, there could be short term fluctuations based on changes in demand.  For example, maybe it takes a month to get a new miner and fire it up, but there could be lots of people who want to pay a premium to start mining today.  Cloudhashing.com has had large fluctuations in price for that reason.

Don't you want more power (GHS) when difficulty rises?
(when doing cloud mining at CEX, GHS is actually the only way for "mining" - yeah or trading GHS/BTC).

[grunt]

When difficulty rises those Ghash will be earning less BTC per day. And thus lose value. In the past month prices on cex.io for Ghash have halved.
IMO the price per gigahash is dependent on difficulty, demand, and the price of BTC. Also I imagine events like ghash.io being nearly 51% of the network have effects on demand.

[HappyMinerMan]

Hi, I don't mean to hijack this thread, but I just wanted to give you guys a heads up, there will be some hash power for sale sometime next week. I do not want to disclose too much prematurely, but we will provide year long mining contracts at prices significantly lower than cex.io. Amount for sale will be limited. I will make a more public announcement when the site is more ready. Happy mining everyone!