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Author Topic: Help me understand some specifics of mining, difficulty and price movements.  (Read 889 times)
Gallah
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October 08, 2014, 02:13:23 AM
 #1

I've been interested in BTC for a while and want to understand more along with trading alt's etc. I keep hitting some walls trying to get my head around some of the financial details for bitcoin.

Please help me get my head around bitcoin price in relation to mining difficulty, mining, and the future of the crypto.

I have seen people changed from CPU's for mining to GPU's then to ASIC's because of electricity costs to value ratio. Now that the price has dropped miners are investing in solar energy to power their farms.

As it becomes more difficult to mine a bitcoin older technology becomes obsolete due to difficulty as does falling BTC to fiat ratio. What is going to stop this next downtrend if there is nowhere really to go for the miners.

Bitcoin farms will be unplugged. No more bitcoins but users still trading. So more users want bitcoin but less are being produced.

Does this create a supply/demand issue causing the price to eventually rise again in the same way as resource prices are dictated?

Or could the price just fall off the map for other reasons?

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szmarco
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October 08, 2014, 03:51:04 AM
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The price of bitcoin is affected by money invested, not the cost of mining.
If the price is down. The hashrate will decline according to the cost include device and electric fee etc..

If people have more confidence about the bitcoin future, and many applications around bitcoin arise .More money will put in and the price will go up.
Gallah
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October 08, 2014, 04:00:28 AM
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So even if there was absolutely no mining going on the price could still rise and fall based on buy and sell orders?

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torusJKL
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October 08, 2014, 04:04:49 AM
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[...]
Bitcoin farms will be unplugged. No more bitcoins but users still trading. So more users want bitcoin but less are being produced.
[...]
The network adjusts itself to always create a new block every 10 minutes.
Should suddenly allot of miners be shut down then the difficulty would go down as well.

Mining is not just here to create new bitcoins.
Without mining there would be no new blocks and thus you would not be able to send or receive bitcoins.

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szmarco
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October 08, 2014, 06:38:27 AM
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So even if there was absolutely no mining going on the price could still rise and fall based on buy and sell orders?

If all miner shut down. that will be the end of the bitcoin.
But yes of course ,The price is always decided by buyers ande salers like everthing else.
Peter882
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October 08, 2014, 12:15:04 PM
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As it becomes more difficult to mine a bitcoin older technology becomes obsolete due to difficulty as does falling BTC to fiat ratio. What is going to stop this next downtrend if there is nowhere really to go for the miners.

Bitcoin farms will be unplugged. No more bitcoins but users still trading. So more users want bitcoin but less are being produced.

From CPU to GPU to ASIC, the mining efficiency has been going up incredibly, but the improvement rate can't be sustained like that forever as the new generation of ASIC are already in 20nm process.

Also, as torusJKL explained, if some miners quit, the difficulty will adjust itself within 2016 blocks.

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