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Author Topic: Will the unprofitable mining actually hurt Bitcoin price?  (Read 4985 times)
tsvekric
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June 30, 2011, 12:19:31 AM
 #21

Yes, the number of bitcoin is increasing at an almost constant rate (for now), but not the price to produce them! Higher difficulty means the energy and effort to produce a bitcoin will be higher so miners will not sell it at a low price. Would you sell something you payed 10$ for 7$? I guess that's a no.

So if you paid $1000 for $100 worth of gold, would that make gold rise to $1000 soon so you could sell it or would it just make you stupid?
Mining bitcoins for $10 when the price is $7 will not drive the price up.  This is a logically fallacy and you're conflating sunk costs into price.  What you paid, you paid, you can't change that.  Beyond that you will want to sell high and buy low just like anyone else.  If you think $7 is low and it will eventually go to $10, then you hold on to it.  If you think $7 is a peak, then you're a fool to hold on to it even though you're selling at a loss.  Miners do not dictate the market and they do not even put pressure on market prices.  Supply is supply, demand is demand.  

Would I sell something I paid $10 for, for $7?  That question requires more information.  If I bought something worth $2 for $10, and someone stupid offered me $7 for it, I'd be stupid not to sell at a loss because the whole situation is stupid all around.  When mining becomes too expensive miners will stop mining, not continue paying for bitcoins in the hopes that they can sell them higher than the current market rate!  (Unless they believe price to increase dramatically in the future!)

You seems having hard times understating that. Will you buy something for 10$ (keep mining) and resell it for 7$?

Jesus, did you read my post at all?
It doesn't matter what I paid for it.  I will sell it at highest price I can get - if I think it will go up, I will hold on, if I think it will go down then I will sell.  The market doesn't feel sympathy for what I paid for it.
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June 30, 2011, 12:27:10 AM
 #22

Yes, the number of bitcoin is increasing at an almost constant rate (for now), but not the price to produce them! Higher difficulty means the energy and effort to produce a bitcoin will be higher so miners will not sell it at a low price. Would you sell something you payed 10$ for 7$? I guess that's a no.

So if you paid $1000 for $100 worth of gold, would that make gold rise to $1000 soon so you could sell it or would it just make you stupid?
Mining bitcoins for $10 when the price is $7 will not drive the price up.  This is a logically fallacy and you're conflating sunk costs into price.  What you paid, you paid, you can't change that.  Beyond that you will want to sell high and buy low just like anyone else.  If you think $7 is low and it will eventually go to $10, then you hold on to it.  If you think $7 is a peak, then you're a fool to hold on to it even though you're selling at a loss.  Miners do not dictate the market and they do not even put pressure on market prices.  Supply is supply, demand is demand.  

Would I sell something I paid $10 for, for $7?  That question requires more information.  If I bought something worth $2 for $10, and someone stupid offered me $7 for it, I'd be stupid not to sell at a loss because the whole situation is stupid all around.  When mining becomes too expensive miners will stop mining, not continue paying for bitcoins in the hopes that they can sell them higher than the current market rate!  (Unless they believe price to increase dramatically in the future!)

You seems having hard times understating that. Will you buy something for 10$ (keep mining) and resell it for 7$?

Jesus, did you read my post at all?
It doesn't matter what I paid for it.  I will sell it at highest price I can get - if I think it will go up, I will hold on, if I think it will go down then I will sell.  The market doesn't feel sympathy for what I paid for it.


I give up. I suggest you look at http://en.wikipedia.org/wiki/Shall_and_will

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June 30, 2011, 12:27:29 PM
 #23

Yes, the number of bitcoin is increasing at an almost constant rate (for now), but not the price to produce them! Higher difficulty means the energy and effort to produce a bitcoin will be higher so miners will not sell it at a low price. Would you sell something you payed 10$ for 7$? I guess that's a no.

So if you paid $1000 for $100 worth of gold, would that make gold rise to $1000 soon so you could sell it or would it just make you stupid?
Mining bitcoins for $10 when the price is $7 will not drive the price up.  This is a logically fallacy and you're conflating sunk costs into price.  What you paid, you paid, you can't change that.  Beyond that you will want to sell high and buy low just like anyone else.  If you think $7 is low and it will eventually go to $10, then you hold on to it.  If you think $7 is a peak, then you're a fool to hold on to it even though you're selling at a loss.  Miners do not dictate the market and they do not even put pressure on market prices.  Supply is supply, demand is demand.  

Would I sell something I paid $10 for, for $7?  That question requires more information.  If I bought something worth $2 for $10, and someone stupid offered me $7 for it, I'd be stupid not to sell at a loss because the whole situation is stupid all around.  When mining becomes too expensive miners will stop mining, not continue paying for bitcoins in the hopes that they can sell them higher than the current market rate!  (Unless they believe price to increase dramatically in the future!)

You seems having hard times understating that. Will you buy something for 10$ (keep mining) and resell it for 7$?

If the sole perpose of buying the item is to sell it, then buying for $10 and selling for $7 is silly. But people often buy items for more than they could sell them for. Consider buying a new car for $20,000. As soon as you drive it off the lot, you could maybe get $15000 for it. People buy cars all the time, are they all stupid? And now you will probably say bitcoins have no other use besides being sold, that argument has been addressed here on the forums already.

See the poll about when people will quit mining:  http://forum.bitcoin.org/index.php?topic=24542.0

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Man From The Future
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June 30, 2011, 12:32:47 PM
 #24

Actually, miners do change the number of bitcoins generated - if hashing power constanty increases, we get more than 300BTC per hour, as the difficulty only changes every 2016 blocks.

The inverse also applies. Tongue

Whether this changes how many are sold much, I don't know Smiley
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July 04, 2011, 03:10:45 PM
 #25

The vast majority of the currency is held by miners. When they need the money, or are afraid they can't recoup costs. They will drop the market. I think we could easily see $15 again in the next week.

Oops, You was right 14.6  Sad

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