Bitcoin Forum
December 11, 2016, 06:20:39 AM *
News: Latest stable version of Bitcoin Core: 0.13.1  [Torrent].
 
   Home   Help Search Donate Login Register  
Pages: « 1 [2]  All
  Print  
Author Topic: Why difficulty DOES affect price  (Read 3079 times)
tomcollins
Full Member
***
Offline Offline

Activity: 182


View Profile
May 27, 2011, 03:18:09 AM
 #21

I do enjoy your charts bitcoinBull, nicely done!  I agree, price/difficulty is a good ratio to use.  Even at $1.00 and difficulty of 100,000, there was still serious profit to be had by mining.  I think if we see the ratio drop to 0.5 or below, that's when we'll really see a good portion of the miners drop out.

There is a difference between dropping out and not investing in mining.  I need to look, but the last time people dropped out, was there any relation to when GPU mining was introduced?  If this was the case, it was the first time CPU mining became unprofitable.

As the ratio gets smaller and smaller, some forms of GPU mining become unprofitable due to electricity costs.

What really is happening is the difficulty is much like a ratchet.  It requires a bit of force to turn, but stays at that level.  Maintaining the current price in the face of reasonably large inflation (2.75 million coins per year mined!), you need a steady stream of force to hold that up.  If that stream ever lets up, the price drops.

As for miners not selling, that's a different market force absorbing (opportunity cost of miners not selling in a way).  They are choosing to save rather than "consume" the coins.  It's a lot easier to have people hoard the coins than to outright buy them.  Eventually difficulty will get to a point where operational costs will force some to come offline.  We are a long way from that.  The question is how that will affect price.  I think you'll see a near constant difficulty ratio at that point (margin increases from miners who have free electricity, perhaps).
1481437239
Hero Member
*
Offline Offline

Posts: 1481437239

View Profile Personal Message (Offline)

Ignore
1481437239
Reply with quote  #2

1481437239
Report to moderator
1481437239
Hero Member
*
Offline Offline

Posts: 1481437239

View Profile Personal Message (Offline)

Ignore
1481437239
Reply with quote  #2

1481437239
Report to moderator
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
Dobrodav
Full Member
***
Offline Offline

Activity: 140


View Profile
June 02, 2011, 09:46:42 PM
 #22

I am think that was mentioned above, but still:

Indeed, there is a relationship between complexity and cost, but it is not straight. Miners, forced to sell their bitkoins relatively quickly, to recoup their costs and investments in equipment. In fact, right now, - they are the main sellers. "Old BTC" are not on sale now, or putted on market very carefully.

We will  meet in not-so-distant future.
Today`s strange music :
http://www.youtube.com/watch?v=V8mCgjbBPMk
Yesterday`s  strange music:
http://www.youtube.com/watch?v=-uCTyC1FGLw
Pages: « 1 [2]  All
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!