Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[molecular]

The idea that 3600 coins are being dumped on the market daily is a myth.

3600 coins are created daily. demand absorbs them, otherwise price would fall. nothing mythical about it.

[brg444]

If 350-400$ was a low price back then what do you believe they consider 250 nowadays?

A lesson?

 

Yes, I'm sure millionaires that have probably been mining since the double digits days are quite bothered by a price drop.

.... or maybe not http://www.coindesk.com/bitfury-details-100-million-georgia-data-center/

BitFury will invest $100m in building a 100MW bitcoin mining data centre in Georgia

[brg444]

The idea that 3600 coins are being dumped on the market daily is a myth.

3600 coins are created daily. demand absorbs them, otherwise price would fall. nothing mythical about it.

Well to be clear the myth is that miners sell those coins on the market which would definitely affect the price.

In reality it isn't so black and white and a considerable portion of coins are certainly held by these same miners.

[Fatman3001]

how do they pay electricity if they don't sell their coins? 15 % of the network today is like few MW a month.

The entire network probably pulls around 250MW. At 4 cents per kw/h that's $240,000 per day in electricity. Which would be 1000 coins a day when the price is $240.

Now at $263 that's 912.5 coins. At $300 that's 800 coins.

Now that's just electricity, but if you assume that a large part of the mining community wants to keep as many coins as possible until prices improve you might expect the supply of coins to tighten as the price moves up.

Could you offer TL;DR of how you've arrived at 250MW?  Not doubting you, just wondering what that number is meant to represent.

The network is at 500 petahash  and the machines are pulling an average of 0.5w/gh (Ant s3 0.7w/gh, SP-tech 0.6w/gh, ant s5 0.5w/gh and newer gear 0.25w/gh).

As far as miners wishing to sell coins when they're worth less and hold on to them once they're worth more?  Seems a bit counterintuitive, can you walk me through your reasoning?

I think a lot of miners see BTC as undervalued now and want to hold as much as possible until the price heads north. That's a messy business model, so I'm not sure how many can convince their investment partners to agree to it. But I seriously doubt that there are that many who don't have a business model where the mine pays its own bills. As in where bills are paid out of the owners pockets rather than selling minted coins. They are probably out there, but I don't think they're a major factor.

However, there is a reason why I wrote "if you assume". I can't wholeheartedly support this theory. It may very well be that a large majority converts all of their coins fairly immediately. That's a tidy and safe business model..... then again, nothing is safe in Bitcoinland. ¯\_(ツ)_/¯

[adaseb]

You guys are bad at trading. Looking at the daily charts the major resistance and supply area is around $300. Whenever price hit that area there was massive selling. Most likely that will be the top in the near term, then it will either go back down to the $220's or hopefully would break the $300 and then retest it on heading higher.

I don't see it breaking $300 yet, maybe closer to the halving.

[molecular]

If 350-400$ was a low price back then what do you believe they consider 250 nowadays?

A lesson?

priceless!

[ChartBuddy]

Coin

Explanation

[Fatman3001]

nice discussion we got going here.  

no i don't know exactly were freshly mined coins are going. nobody knows. everybody has just hear-and-say informations.

i personally did some business some time ago with mining farm folks and my impression was they gave a shit about bitcoin. privately they held no more than a handful of coins maybe. for them it was just a better kind of investment as into high-yield-bonds or something.

but i accept that bitfury may keep them, quite possible.

nevertheless the market has to absorb 1 mioUS$ everyday, thats a fucking lot and halving will kick some ass.

Make it half that

If they are not selling their coins, then they need to raise *an* amount of fresh capital (or use reserves) every day to cover production costs and keep the lights on. Either way, the money has to come into the system unless they have 'free' electricity. If they are not selling the production it is hard to see how much of the new funding can go into development of infrastructure in an environment of falling prices (which presumably means they are even more reluctant to sell ...)

Well, I guess we know now where the VC money is really going. Whether that was their intention or not is another matter ...
Probably gives them a bit of extra leeway to 'massage' the market ... can't believe they would sit on their hands and not buy more if it they were too cheap to sell at $350-$400 ish ...

There's another way to look at this (I think). You either mine to sell instantly or you mine because you or your investors want coins. Coins that would otherwise have been bought at exchanges. Either way they're absorbed by the market.

[phoenix1]

nice discussion we got going here.  

no i don't know exactly were freshly mined coins are going. nobody knows. everybody has just hear-and-say informations.

i personally did some business some time ago with mining farm folks and my impression was they gave a shit about bitcoin. privately they held no more than a handful of coins maybe. for them it was just a better kind of investment as into high-yield-bonds or something.

but i accept that bitfury may keep them, quite possible.

nevertheless the market has to absorb 1 mioUS$ everyday, thats a fucking lot and halving will kick some ass.

Make it half that

If they are not selling their coins, then they need to raise *an* amount of fresh capital (or use reserves) every day to cover production costs and keep the lights on. Either way, the money has to come into the system unless they have 'free' electricity. If they are not selling the production it is hard to see how much of the new funding can go into development of infrastructure in an environment of falling prices (which presumably means they are even more reluctant to sell ...)

Well, I guess we know now where the VC money is really going. Whether that was their intention or not is another matter ...
Probably gives them a bit of extra leeway to 'massage' the market ... can't believe they would sit on their hands and not buy more if it they were too cheap to sell at $350-$400 ish ...

There's another way to look at this (I think). You either mine to sell instantly or you mine because you or your investors want coins. Coins that would otherwise have been bought at exchanges. Either way they're absorbed by the market.

That is totally reasonable. And works for as long as the miners can continue to raise extra funding from this type of VC, who in reality, may aswell buy and hold BTC themselves (on or off exchange) and not take the risk on the company and what it may or may not do with or wthout their permission.

EDIT: I guess we will never really know, so its kind of an endless and pointless discussion at the end of the day ... but this is the SPECUALTION forum so we don't need 'facts' 

[JorgeStolfi]

The entity I'm referring to is Bitfury

1. They're already wealthy people.
2. They have loads of VC money
3. They used to make what is likely to be ridiculous amounts of profits selling mining gear.

I have heard the argument "he is rich therefore he doesn't need more money" used to introduce a couple of egregious scammers and thieves.  Even in this context, it is a bogus argument: usually, rich people are rich because they always want to make more money that they already have.

I'm convinced KNC is not selling all of their coins.

KnC seems to be "selling" some of their mined coins in the form of the XBT Tracker One Electronically Traded Notes.  Those are issued through NASDAQ Sweden by a company somehow connected to them.   As I understand it, KnC keeps the bitcoins and sell IOUs that promise to pay the holder whatever the current BTC price will be at the time.  

The buyers of those notes may be a different population than the people who buy at the exchanges, so those "sales" may not impact the price immediately (as they would if KnC were to sell the BTC on the exchanges).  However, if many holders decide to redeem the notes, KnC may be forced to sell the BTC to raise the money for that.

The notes that they issued and sold so far correspond to ~16'000 BTC.  I am too lazy to compute how much that represents compared to their mining (~8% of the hashrate presently, which means ~12 × 25 BTC every day).

If 350-400$ was a low price back then what do you believe they consider 250 nowadays?

It would be perfectly logical to consider $400 a low price a year ago, and $230 a high price today... 

Anyway, miners have an obvious incentive to lie and hide their sales.  Whether they hold or sell immediately, they very much want everybody else to buy and hold.  

[yefi]

Yes, I'm sure millionaires that have probably been mining since the double digits days are quite bothered by a price drop.

.... or maybe not http://www.coindesk.com/bitfury-details-100-million-georgia-data-center/

BitFury will invest $100m in building a 100MW bitcoin mining data centre in Georgia

Don't entertain the illusion of millionaires who roll-up dollar bills and smoke them. Any miner that shows the disregard you suggest will not stay in this game for long. Vavilov knows this only too well.

[yolalanda]

... Could you offer TL;DR of how you've arrived at 250MW?  Not doubting you, just wondering what that number is meant to represent.

The network is at 500 petahash  and the machines are pulling an average of 0.5w/gh (Ant s3 0.7w/gh, SP-tech 0.6w/gh, ant s5 0.5w/gh and newer gear 0.25w/gh).

You might be missing some details:
1. It's safe to assume that any [already purchased] gear will be kept online as long as it mines more coin than it costs to run.  And 'costs to run' = electricity + cheap warehouse space.

2. Also non-miner electrical costs (Cooling ~37% of electricity used in a [real] data center). Yeah, Chinese chicken coops are less exotic than actual data centers, but still...

Many mining companies are folding, making me think that mining costs are beginning to approach coin price (as satoshi predicted).  If that's the case...

[phoenix1]

@ Jorge

Re KnC, they had about 10k coins when they launched the ETN, and based on your numbers they will have mined about 45,000BTC since the launch. ETN issuance is currently stable at about 15k BTC (for the $ note - have not looked at the Euro one - is it even launched yet?)
IIRC correctly they have stated they are in this for fiat and don't hold BTC (except those they are obliged to to back the ETN)
Pretty sure it was member 'dropt' who had the best info on them

[billyjoeallen]

I think 250MW is underestimating the power demands of the network.  Bitfury's new datacenter is going to be 100 MW by itself.  Most miners are using 27nm ASICS or worse with some people still actually using GPUs for wha,t I don't know, nostalgia? 

300MW is a conservative estimate and quite possibly higher.  This is why I think it's silly to hold up the block size increase because it's going to make it difficult to mine over TOR.  It's damn near impossible to mine profitably now--over TOR or otherwise-- considering energy costs, hardware costs, bandwidth costs, etc. Any operation with the economy of scale large enough to mine profitably will be extremely difficult to hide from the tax man or other gov. agents. SO WHY BOTHER USING TOR?

Bitcoin is going legit. It has to, because that's how we'll get the money to finance the next weapon against "the Man".  Sell out to Wall Street and start over with something less traceable while being more private and secure.

[billyjoeallen]

KnC seems to be "selling" some of their mined coins in the form of the XBT Tracker One Electronically Traded Notes.  Those are issued through NASDAQ Sweden by a company somehow connected to them.   As I understand it, KnC keeps the bitcoins and sell IOUs that promise to pay the holder whatever the current BTC price will be at the time.  

Throughout history, every time someone keeps the assets and trades warehouse receipts for that asset (I.O.Us), the IOUs multiply faster that the assets that back them up. It's Why Nixon was forced to abandon the Gold Standard in 1972.  It's why Gox closed.

But before that happens, the I.O.U.s have the effect of increasing the apparent money supply, leading to lower purchasing power per unit currency.  Inflation. 

[Fatman3001]

... Could you offer TL;DR of how you've arrived at 250MW?  Not doubting you, just wondering what that number is meant to represent.

The network is at 500 petahash  and the machines are pulling an average of 0.5w/gh (Ant s3 0.7w/gh, SP-tech 0.6w/gh, ant s5 0.5w/gh and newer gear 0.25w/gh).

You might be missing some details:
1. It's safe to assume that any [already purchased] gear will be kept online as long as it mines more coin than it costs to run.  And 'costs to run' = electricity + cheap warehouse space.

A very large portion of the miners today are old Ant S3's. But a lot of mines will simply replace miners rather than upgrade capacity when things are as marginal as they are now. Some will sell the old gear on, but not all of them. Maybe not even a majority. In any event, I don't see how this would alter my rough estimate in any discernible way?

2. Also non-miner electrical costs (Cooling ~37% of electricity used in a [real] data center).*Yeah, Chinese chicken coops are less exotic than actual data centers, but still...

Many mining companies are folding, making me think that mining costs are beginning to approach coin price (as satoshi predicted).  If that's the case...

Cooling is a lot cheaper in purpose built mining centers. They don't have to worry about disrupting services or corrupting data if a unit breaks. They just chuck it out the window. I'm not sure what the average in cooling costs are, but it's a heck of a lot lower than 37%. Maybe 3.7%? Would 260MW sit better with you?

What's not taken into account is what a price rise will do to the hashrate. But that depends on the speed of the increase and the availability of HW.

Many mining companies are folding, making me think that mining costs are beginning to approach coin price (as satoshi predicted).  If that's the case...

Definitely, the dutch and belgian mining operations with 20 cents per kw/h went first. While areas with 2 cent kw/h are booming. It's a volatile market.

[hdbuck]

KnC seems to be "selling" some of their mined coins in the form of the XBT Tracker One Electronically Traded Notes.  Those are issued through NASDAQ Sweden by a company somehow connected to them.   As I understand it, KnC keeps the bitcoins and sell IOUs that promise to pay the holder whatever the current BTC price will be at the time. 

Throughout history, every time someone keeps the assets and trades warehouse receipts for that asset (I.O.Us), the IOUs multiply faster that the assets that back them up. It's Why Nixon was forced to abandon the Gold Standard in 1972.  It's why Gox closed.

But before that happens, the I.O.U.s have the effect of increasing the apparent money supply, leading to lower purchasing power per unit currency.  Inflation. 

gox closed because the USG froze their accounts. (and because MK is awesome)

[billyjoeallen]

Successful mining requires a specialized skill set. Successful trading requires a completely different specialized skill set.  Very few people are gifted to possess both. enough. In general, even successful miners lose some profit trading and some of the best traders lose money mining. 

Miners will sell too many coins at low prices and too few at high prices. That's we we have such high volatility. Successful traders buy low and sell high, reducing volatility, but traders don't get the coins first. Miners do.

[ChartBuddy]

Coin

Explanation

[tarmi]

But before that happens, the I.O.U.s have the effect of increasing the apparent money supply, leading to lower purchasing power per unit currency.  Inflation. 

huobi