Miner's Union?

[enmaku]

In light of the recent downtrend in the value of BTC I've got a proposal to help turn things around. These bubbles and their associated bursting are not our fault, my fellow miners. We want nothing more than to mine some bitcoins and sell them for a reasonable profit over our cost of equipment and operations. Most of the miners I've talked to are not the "get rich quick" speculator types. Sure we'd like to make some money but we're also in this thing for the long haul (at least I am). To this end I propose a sort of solution. I propose a union for the purpose of price-fixing in an attempt to stabilize the market value of bitcoin.

Every day something on the order of 7,200 BTC are generated by mining operations. If we were to assume that the vast majority of miners are acting in a for-profit manner and selling their generated coins this would account for 10 to 15 percent of the total volume of BTC traded on MtGox in a given day. While certainly not the majority this is a strong enough percentage that we should be able to wield some influence at least over the market.

I say we agree on a difficulty/price ratio that will allow us to make a reasonable income in return for our efforts and absolutely stick to it. In both directions. If speculators try to increase price too far beyond our agreed-upon limit, they will likely fail as at least 10% of the market will be selling at a lower rate. If the market attempts to dip below our rate, at least 10% of the market will be resisting the dip. This will hopefully produce the kind of stability we need in this sort of market. Price per BTC will suffer fewer fluctuations and will only rise or fall as a factor of difficulty which, of course, is a factor of the number of people mining which is a factor of adoption rate.

It might work, it might fail. We might have enough power to demand a fair price at market and we might not but I think we owe it to the community to at least try. Who's with me?

Edit: As it turns out my idea wasn't much like a union at all, more of an educational effort regarding the VALUE of bitcoins as compared to their PRICE. To that end, I've obtained http://bitcoinreference.com and set up a redirect for the old btcunion.com domain. You can all stop defining the term union for me or giving me your opinions on unionization, whether bitcoin miners constitute a "workforce" etc.

[innervisi0nn]

 

[enmaku]

I'd also like to add my personal suggestion: Historically the market seems to have had no problem supporting a price of difficulty/25,000 or so which right now would be $22.69/BTC. These bubbles are usually temporary but they have to be resisted by some kind of market pressure or eventually one of them will cause a downward trend so bad that it drives the price lower than what is sustainable for mining. Remember, miners aren't just "printing money" we're also building the block chain. No miners = no bitcoin. It's in all of our best interests that we keep this at least somewhat profitable for miners or else the whole thing could fall apart.

[mjsbuddha]

good luck herding these cats.

[hugolp]

Please, form the union. It will be curious. But I hope you know you are going to fail.

Without government regulations you are going to have a very hard time manipulating the price and will end up failing.

[jasonk]

Start it up, make a website, a new forum make it private and lets work on a strategy.  Might work, might not.

[enmaku]

I never said it would be easy but it just might work and it really would be in everyone's best interest. In real world commodities there's an original producer for every good we trade and that producer has to make a living too, so they represent a floor below which the price of that commodity can't typically drop. Even if we ignored the upper-bound idea of preventing bubbles from arising with our combined power we can at least prevent the bubbles from destroying the market when they burst by agreeing on a minimum acceptable price, based on difficulty.

Hell maybe "union" is just too strong a word, maybe just putting up a web site that does the math and calculates today's rate would be enough. If enough people start referencing it and using that value as their minimum acceptable price at least it'd put a floor on the market.

[enmaku]

I'm working on a web site now, you'll have to give me a bit to actually have something up but I just purchased btcunion.com 

[Reikoku]

Although I have little love for unions, this actually seems like a reasonable step towards price stability.

[enmaku]

Although I have little love for unions, this actually seems like a reasonable step towards price stability.

Again, "union" might not be the correct word, but I've already bought the domain so.... 

[pwnyboy]

As a staunch capitalist, I have to disagree with this union foolishness.  Economics 101:  If someone is selling at $10, someone else is taking the other side, essentially betting that coins will be worth more than $10 in the future.  In fact the aforementioned figure of $22.69 sounds spot-on to me, so let's assume they'll rebound to that, or whatever the equation leads to in the future, accounting for difficulty.  What then is the net effect of this pricing instability?  Quite simply, that kiddie miners who don't approach this like a business (the OP probably does not fall into this category) will scream "oh gnoes the sky is falling!!!111111" and get out of mining.  People this is GOOD NEWS!  Anyone who can't handle a month or two of sub-par Bitcoin valuation should not be in the business of minting, period.  Isn't that what you're all taught in business school - that you should prepare for the possibility of economic downturns lasting for months (if not years)?  Oh what's that you say, they don't hold business classes in mom's basement?  Sorry, my mistake.

</rant>

[hugolp]

I never said it would be easy but it just might work and it really would be in everyone's best interest. In real world commodities there's an original producer for every good we trade and that producer has to make a living too, so they represent a floor below which the price of that commodity can't typically drop. Even if we ignored the upper-bound idea of preventing bubbles from arising with our combined power we can at least prevent the bubbles from destroying the market when they burst by agreeing on a minimum acceptable price, based on difficulty.

Hell maybe "union" is just too strong a word, maybe just putting up a web site that does the math and calculates today's rate would be enough. If enough people start referencing it and using that value as their minimum acceptable price at least it'd put a floor on the market.

The words used for this kind of arrangements are "union" and "cartel". They are both basically the same thing, but for some reason the word "union" has a better emotional acceptance.

And please, dont let my words discourage you. Go and form the union/cartel. But whether you like it or not, mining will be a very low yielding business at some point, and there is nothing you can do about it. Competition will crash your union/cartel badly (if you dont receive support from the government obviously).

[enmaku]

Well I probably won't have anything really worth looking at until tomorrow (standard drupal landing page for now) but I've got a functional (if half configured) PHPBB install that I'm hoping to have ready before I go to bed tonight, at least to encourage some discussion until I can get to the rest of the site. Also, if anyone has a ready-made PHP snippet to pull the current difficulty I would be forever in your debt for a copy of such a time-saving bit of text... send me a PM?

[supa]

<?php
$ch = curl_init();

curl_setopt($ch, CURLOPT_URL, "http://blockexplorer.com/q/getdifficulty");
curl_setopt($ch, CURLOPT_RETURNTRANSFER, 1);

$result = curl_exec($ch);

echo $result;
?>

[enmaku]

Thank you so much, supa. Much as I love FOSS my formal training is all in ASP so the switch to Linux hosting has been fun

For anyone else who is interested, forums should be up/open at http://www.btcunion.com/forum if you'd like to discuss the specifics of this thing. I'll probably be up for maybe another 30-60 minutes before I'm required by biology to go pass out, but I promise to start working on this site first thing in the AM. I don't necessarily want to put it all out there as though it's official until I hear some input from other miners: Difficulty/price ratios, what's too high what's too low, should we enforce pricing in both directions to provide stability or only seek to enforce a minimum, etc. There's only the one forum for now and I've appointed one moderator I know I can trust (since she's sitting 3 feet away from me and I'm marrying her later this year) but I'd love to have a couple good mods if anyone feels like volunteering (send a PM and as long as you don't have 2 posts to your name, and one titled "TEH SKY IZ FALL! SELL SELL SELL!!!" you're probably in).

[enmaku]

OK folks, site is online and forum is open for registration and discussion. I have to go unconscious for several hours during which time I will suffer from temporary paralysis and vivid hallucinations. Shortly thereafter I will suffer partial amnesia regarding the event.

See you all in the morning (hopefully with a better-looking market price )

[Oldminer]

I'm working on a web site now, you'll have to give me a bit to actually have something up but I just purchased btcunion.com  

lol he's serious..AWESOME  

Edit: Two questions -

1. Isnt this a form of regulation?
2. Isn't one of Bitcoins advantages over fiat currency the fact that it isn't regulated?

thanks

[hugolp]

I'm working on a web site now, you'll have to give me a bit to actually have something up but I just purchased btcunion.com  

lol he's serious..AWESOME  

Edit: Two questions -

1. Isnt this a form of regulation?
2. Isn't one of Bitcoins advantages over fiat currency the fact that it isn't regulated?

thanks

Its not a form of regulation. He is not forcing anyone to participate.

[Anonymous]

It will be nice to know the price miners think bitcoin should be rather than the speculators.

1.How do you know if someone is a miner
2.What are the union fees.
3.Do you offer a health care plan for injured miners

[SlaveInDebt]

I completely agree that the miners could have an impact on price stability if there was some cooperative effort and agreement to a rough selling price. These +$10 swings in price a day lately are not healthy for bitcoin to do what it was truly set out to do. The word union might best not be used as it meaning to many can be negative.

Just keep spreading the word around and we'll see how that does.