$55 - really? Really? Really?

[Red]

It's worth alot more than $55 per coin, simple as. It's value as an exchange coin for the illegal drugs market alone makes it worth 10x that.

Omg, I never thought of that. Its damn stupid to use something as easily manipulated as gox to get an exchange rate but there's another market knows exactly what the price should be

I know this post was from a few days ago but can anyone explain to me the logic in it?

I don't see the drug trade being very supportive of the bitcoin price at all. Tear apart my logic and show me where I'm wrong.

Presuming a drug dealer sold $1,000 of (X) per day when coins were stable around $30/BTC.
That means that on any given day drug purchasers were buying $1,000 of new BTC on a market = (-33.33 BTC)
AND the drug dealer was selling yesterdays $1,000 of BTC on a market = (+33.33 BTC)
As long as his sales stay flat the drug dealer exerts no pressure on BTC price at all.

In fact if the the BTC price goes up then the drug dealer needs fewer coins to transact his business.
Only if the price goes down does he needs more coins.
As such, the support level that drug dealing lends must be less than $30/BTC

If the price oscillates around $30/BTC slowly the drug dealer doesn't have to care.
If the price moves faster, drug dealers are very likely to become day to day speculators and amplify the oscillation.
(turn over BTC slowly while the price moves up, turn over BTC quickly while the price moves down.

In no way to I see how the drug trade could possibly "support" a BTC price at the $550 level. You would have to presume that the drug trade had grown crazy exponentially since the $30/BTC level.

[firefop]

I'm fascinated by this math but it doesn't seem logical to me. I don't think the break-even prices you give are constant. Now I haven't thought about this a lot so there's a strong likelihood I'm wrong. Please show me where.

Manfred says currently he mines 6.3 BTC/month at a cost of $150/month or $23.80/BTC
Adrian-x says the same (I'm guessing) calculation gives him $17.76/BTC

It seems to me however that at current BTC prices similar rigs must be profitable for everyone else as well. This encourages more people to mine raising the difficulty.

As the difficulty goes up, your constant hash rate rigs generate LESS coins at the same energy costs. RAISING what you see as your break-even rates. So say the hash rate doubles and difficulty doubles. Now aren't your break-even rates $47.40/BTC and $35.52/BTC respectively?

Do you simply recalculate your particular rigs minimum break-even every time the difficulty changes?
Can you do this calculation in advance? Or are you simply doing it retrospectively.

personally, I recalculate it periodically.

I choose to evaluate my operation as a whole. Total cost to run relative to earnings at btc/usd rate. I include a repayment plan for any hardware i've purchased. Often this amounts to vastly reduced earnings in a given time period, since I'm inclined to think of the $700 profit as 'paying off' the last 2 graphics cards I bought and only making 100 bucks that week.

[Red]

personally, I recalculate it periodically.

I choose to evaluate my operation as a whole. Total cost to run relative to earnings at btc/usd rate. I include a repayment plan for any hardware i've purchased. Often this amounts to vastly reduced earnings in a given time period, since I'm inclined to think of the $700 profit as 'paying off' the last 2 graphics cards I bought and only making 100 bucks that week.

Thank you for answering! That sounds quite sensible to me.