Should we have BPEC? (or Association of Motivated Miners Making Oversized Walls)

[scrybe]

In a similar situation to the Oil and Gas industry we find ourselves competing for a shared and dwindling resource. OPEC was started to allow those producing the product to exert market control, and while the exact mechanism is not available due to the predictable overall outflow of BTC, there might be some opportunities to help guide the price of shares or BTC through cooperation.

The 2 ways I've thought of so far are:

• Voluntary participation in a group "Sell Wall" @ 10% or higher premium over market, coordination of sell wall changes through forum to help raise price
• Public mining restriction forecasts (not sure if this will really solve the German Tank problem, little hope in holding down share production)

Obviously the repercussions for violating these agreements would be unenforceable without community participation, but if we do "catch" someone selling low options are limited, but if we can get everyone selling their shares for a premium rather than par we should be able to ensure fiat profitability in mining far longer than we can operating independently.

Have you guys thought of other ways to leverage supply?

Is there an easy line between a volunteer effort to build a sell wall, and a cartel? Are we facing significant legal issues if we try to coordinate something like this as a group?

Just a thought, looking for feedback.

Thanks,

Scrybe

edit: above this line is the OP, below is a set of rules and observations that have been thought of so far
Sample Ruleset for Members

• Membership is strictly voluntary, Members can leave at any time by withdrawing from your holding account.
• Leadership will consist of a board to be elected, (including chair, vice-chair, secretary, treasurer, and 3 directors at large?) and will operate within published bylaws
• Members agree to hold at least 10% of their net mining profits in BTC on one or more exchanges with active sell orders at the Member price
• Member Price is updated on Member website at time of block difficulty change, all members are expected to updated their sell prices within 24 hours
• Member Price may be set by formula or vote, TBD by Members
• Members agree to hold a total of at least 50% of their net mining profits in BTC in some form (including BTC denominated investments)
• Members agree to hold some portion of held BTC (>1% preferred) in a public holding account. (bragging rights?)
• Members can join by sending dues (TBD, minimum to run the site and such) to Group Address from their holding account (monthly? quarterly? annually?)
• Member website monitors holding addresses to measure success, and confirm continuing membership by lack of spending on holding account
• Members agree to offer discounts on goods and services they offer to the public at a minor discount (2-10% recommended, depending on type, this only applies to fees on exchange type transactions)
• Board will attempt to acquire additional discounts or freebies from community businesses in recognition for miners efforts (i.e. get MtGox to offer members a free fee bump to the next level down, since they are committing to holding a large amount of BTC on the MtGox servers)

Keep the thoughts and suggestions coming!
AMMMOW

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[DobZombie]

Haven't they done something like this?  Bitcoin Foundation?

https://bitcoinfoundation.org/

[scrybe]

Haven't they done something like this?  Bitcoin Foundation?

https://bitcoinfoundation.org/

I don't think so, I'm thinking of a mining specific organization. BCF is more about promoting adoption as a currency,

I'm talking about getting all (or a large number) of miners to agree "not to sell below $20" or something like that.

[aqrulesms]

Haven't they done something like this?  Bitcoin Foundation?

https://bitcoinfoundation.org/

I don't think so, I'm thinking of a mining specific organization. BCF is more about promoting adoption as a currency,

I'm talking about getting all (or a large number) of miners to agree "not to sell below $20" or something like that.

Horrible idea.  Bitcoin should be decentralized, and demand should govern the price, not sellers refusing to sell below a certain point.

That is just an artificial increase in price.

[arklan]

and good luck getting even a majority, let alone ALL miners to agree to this. "you guys won't sell below 20? well, if i sell at 19.50... "

[crazyates]

and good luck getting even a majority, let alone ALL miners to agree to this. "you guys won't sell below 20? well, if i sell at 19.50... "

Well fuck me! I'm gonna sell at 19.25!

[scrybe]

and good luck getting even a majority, let alone ALL miners to agree to this. "you guys won't sell below 20? well, if i sell at 19.50... "

The thing is, I don't think you need a majority, just a large number.

All we really need is a bunch of like-minded folks, and we can build a wall on MTGox. This wall will lure in the speculators and bots, causing the price to rise.

Of course some (a lot) of folks won't hold to the rules, but we all know that the big potential money in BTC is holding it, so we are really just asking folks to help us while they help themselves.

If we even get a commitment from 25% of miners that they will withhold 50% of their BTC from the market until X price, some will hold onto 80%, some 30%, but on average we could be looking at reducing the daily BTC supply by 12.5%

So maybe less OPEC as the model and more "A Loose Consortium of Like-Minded Miners"

I also just realized that we CAN have some community policing of an operation like this, participants can publicly state the address they are using for holding and we can watch for spending.

Keep the comments coming, even the negative (but constructive) ones. I want to figure out all the ways this can fail before trying it. I'm going to start updating the OP to include an example set of rules.

[scrybe]

and good luck getting even a majority, let alone ALL miners to agree to this. "you guys won't sell below 20? well, if i sell at 19.50... "

Well fuck me! I'm gonna sell at 19.25!

Sweet! Selling at 19.25 rather than 12, success!

That's the cool thing, if there are enough folks selling at a set price, others will ride along above and below the line as well. If we can attract them to our line, we can move some of them off market rate, and the price goes up.

[Gatorhex]

Just let normal market forces work.

Anyone who sells below their electricity costs will realise they are an idiot after the bill arrives.

[scrybe]

Just let normal market forces work.

Anyone who sells below their electricity costs will realise they are an idiot after the bill arrives.

Why would we not TRY to be more profitable? We should just give up and let the market get our BTC for the least possible value? Bah, crazy talk.

I aim to make the market pay a premium for my coins, and every additional miner who does the same can amplify the effect. If you want to sell cheap, go for it.

This is one of those Big-Hands/Little-Hands things, I'm trying to think bigger, not smaller.

[Gatorhex]

Why would we not TRY to be more profitable?

Because it's market manipulation, and you risk destroying your market, or having it regulated by a government agency.

Or as in the case with OPEC having the US troops arrive for regime change.

If you think the price is too low, don't sell, it's that simple.

[scrybe]

With half of all bitcoin already in circulation, what makes you think miners matter when it comes to price?

everyone matters when it comes to price, it's just a matter of how much.

Post halving 150BTC/hr come into the market, 3600/day. Let's assume 50% is saved, and 50% is exchanged (I know, arguable, but I had to start somewhere)
This means that with the current volume on MtGox (24k today) we are talking about 7.5% of volume in mining revenue. Even if it goes up to 100k in volume (which if you think about it gets more and more expensive as the price goes up) miners still account for 3.6%

So as a daily percentage whole, I agree, it's not huge. However if we all stack up on the same $ amount, over time it could get to be a big impact.

Let's say we get 1000 miners to participate and they make an aggregate of 1000 BTC/day (because math is hard, not because that is an actual number I expect to see) If they all hold onto that BTC and place 10% of it (BTC100 total) on MtGox at the 20$ mark, then each day we add $2k to the 20$ wall. Over the next 30 days we are talking about a position worth 60k, 60 days gets us to 120k.

Once the price gets up to $18 or so we will have to decide how much profit we want to take, vs moving up to a higher sell number. If we use 50/50 again we have a cash-out at $20 of $60k of the position, but the remaining 1500 BTC are relisted at $30 for a position of $45k and $3k/day expansion of the position.

The key is stacking everyone up on the same value so it's conspicuous in the trading tools, in the above scenario and the current order book we could put more coins on $20 each month than are there right now. given a year I bet we could be the single highest step on the wall at all times, and act as a signpost to the market. Certainly not a traffic cop, way too small for that.

I'm seriously considering putting most of my earnings into a program like this just to ensure that I'm not selling too low, once I got to thinking about it it makes sense that as a group we can act like a single big fish. or at least a school that pretends to be a big fish.

I'm also open to suggestions on how to structure this, it might make more sense to have 2-5 positions that we take as a group with differing values instead of the 1 big value so that we can "win" by having the wave come all the way into our positions, but not have to start over each time it does happen.

[crazy_rabbit]

I think the most obvious answer is that people will break ranks and sell out big-time when you least expect it. The crypto community is the last community I would ever trust on their word alone.

[scrybe]

I think the most obvious answer is that people will break ranks and sell out big-time when you least expect it. The crypto community is the last community I would ever trust on their word alone.

Talk about a crucible... The irony of the untrustworthiness of a large number of folks in a community that aims to bring trusted anonymous transactions is not lost on me.

My thoughts around this were 3-fold:

Public holding account with an (undeclared) fraction of earnings will be followed by many and there will be a disincentive to touch those accounts without someone making a fuss. This might be the only part of this whole idea that is workable.

It may be possible to enact an enforcement mechanism for those caught breaking ranks, perhaps an incomplete transaction that pays out under certain circumstances? This is a bit of a long shot, and might just be a wasted arms race.

It would be nice if there was a similar public way to make the MtGox Position, without that the sell wall IS vulnerable to crashing without knowing who started pulling out first. Maybe unique values per member that are all within a few mBTC of the desired position? (Member 1 is at 20.00001, 2@20.00002, etc.)