Asic devaluating bitcoin

[atlosas]

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh). Can some1 with math skills count this: Compare the  price of btc(not the 250 buble)/electricity price per gh from gpu era (until Feb 2013) to today bitcoin price/electricity price per gh from asic era.

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[empoweoqwj]

wtf are you talking about?

[Birdy]

If they are too cost-efficient a lot of people will buy them (I guess this does cause the price to go down) -> they will get less Bitcoins than expected in return due to difficult increase and want to sell them higher (price goes up again)

[gmaki]

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh). Can some1 with math skills count this: Compare the  price of btc(not the 250 buble)/electricity price per gh from gpu era (until Feb 2013) to today bitcoin price/electricity price per gh from asic era.

I did that math for the current situation, using specs from Butterfly labs. Can't do historic though since I don't have the data. I came up with a value of $2.00/BC based on current difficulty and cost per GH.

I agree with your assessment by the way. Been thinking about this a lot (since I am new) and it seems inescapable that mining will always regress to cost to (cost of electricity + hardware cost + margin) with electricity being the largest percentage $ wise. There is a huge delta right now in favor of miners but it has to close through either difficulty, price or a combination of both.

[Birdy]

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh). Can some1 with math skills count this: Compare the  price of btc(not the 250 buble)/electricity price per gh from gpu era (until Feb 2013) to today bitcoin price/electricity price per gh from asic era.

I did that math for the current situation, using specs from Butterfly labs. Can't do historic though since I don't have the data. I came up with a value of $2.00/BC based on current difficulty and cost per GH.

I agree with your assessment by the way. Been thinking about this a lot (since I am new) and it seems inescapable that mining will always regress to cost to (cost of electricity + hardware cost + margin) with electricity being the largest percentage $ wise. There is a huge delta right now in favor of miners but it has to close through either difficulty, price or a combination of both.

There is a bit more to be priced in here:
the risk in buying the hardware and receiving it in time is quite big, there needs to be a big margin for it to be still attractive.
Look at all those scam offers, the BFL disaster and so on.
Using advertised data on promised future hardware doesn't give you good results.

[gmaki]

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh). Can some1 with math skills count this: Compare the  price of btc(not the 250 buble)/electricity price per gh from gpu era (until Feb 2013) to today bitcoin price/electricity price per gh from asic era.

I did that math for the current situation, using specs from Butterfly labs. Can't do historic though since I don't have the data. I came up with a value of $2.00/BC based on current difficulty and cost per GH.

I agree with your assessment by the way. Been thinking about this a lot (since I am new) and it seems inescapable that mining will always regress to cost to (cost of electricity + hardware cost + margin) with electricity being the largest percentage $ wise. There is a huge delta right now in favor of miners but it has to close through either difficulty, price or a combination of both.

There is a bit more to be priced in here:
the risk in buying the hardware and receiving it in time is quite big, there needs to be a big margin for it to be still attractive.
Look at all those scam offers, the BFL disaster and so on.
Using advertised data on promised future hardware doesn't give you good results.

I've actually read some hands on reviews of BFL products that seem to bear out the advertised specs. The current supply situation is only that.. the CURRENT situation. But the fact is ASIC are real and one way or another will saturate the marketplace and they do come with a inherent MW to BH ratio that can be used for calculations.

You can already see the effect of the few that have come online recently and it is just a fact that more.. MANY more will come online and will continue to do so until the price/difficulty delta is closed. I have no idea how long that will take but it WILL happen.

[Stephen Gornick]

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh).

You are making the classic mistake in thinking that in crypto coins that the cost of production has anything to do with the market price.

If there was no limit as to how many bitcoins could be mined, you would have a point.   Production would increase, and the flood of additional bitcoins would suppress the exchange rate until mining no longer is lucrative -- and an equilibrium would be reached.  

But with mining, difficulty adjusts and thus no matter how much additional mining capacity comes online, roughly the same amount of bitcoins are produced day after day.

So the amount of mining occurring (hashing capacity) doesn't drive the price, but instead is simply a reaction to price.

Because of how efficient ASIC mining hardware is, the cost of electricity is a trivially low percent of the mining revenue.  This contrasts how with GPUs the cost of electricity does now (... or soon will) exceed the revenue.  

So ASIC has (or will) demolished the profitability when mining using GPUs, but it has little to do with the exchange rate.  (other than, perhaps, miners investing their coins to buy ASIC hardware, and in turn ASIC hardware vendors flooding the market with coins when cashing them out for R&D and manufacturing costs.)

[gmaki]

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh).

You are making the classic mistake in thinking that in crypto coins that the cost of production has anything to do with the market price.

If there was no limit as to how many bitcoins could be mined, you would have a point.   Production would increase, and the flood of additional bitcoins would suppress the exchange rate until mining no longer is lucrative -- and an equilibrium would be reached.  

But with mining, difficulty adjusts and thus no matter how much additional mining capacity comes online, roughly the same amount of bitcoins are produced day after day.

So the amount of mining occurring (hashing capacity) doesn't drive the price, but instead is simply a reaction to price.

Because of how efficient ASIC mining hardware is, the cost of electricity is a trivially low percent of the mining revenue.  This contrasts how with GPUs the cost of electricity does now (... or soon will) exceed the revenue.  

So ASIC has (or will) demolished the profitability when mining using GPUs, but it has little to do with the exchange rate.  (other than, perhaps, miners investing their coins to buy ASIC hardware, and in turn ASIC hardware vendors flooding the market with coins when cashing them out for R&D and manufacturing costs.)

When there is a delta (as there is right now) between price of BTC and cost to produce BTC then every new BTC created is effectively being purchased for less than market value, and as of right now for a fraction of market value. So it would stand to reason that the vast majority will be converted to $$ or other currency immediately upon creation.

It's like insiders caching in options on a normal stock, which drives price down.

This does in fact have a become a market mover to the downside if the overall volume is low enough, which it seems to be. Your statement would be true if the outside interest in BTC overwhelmed the miners influence but it doesn't seem like we are there yet.

It seems to me that other than the recent media fueled bubble, mining is THE primary factor in determining price.

[notme]

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh).

You are making the classic mistake in thinking that in crypto coins that the cost of production has anything to do with the market price.

If there was no limit as to how many bitcoins could be mined, you would have a point.   Production would increase, and the flood of additional bitcoins would suppress the exchange rate until mining no longer is lucrative -- and an equilibrium would be reached.  

But with mining, difficulty adjusts and thus no matter how much additional mining capacity comes online, roughly the same amount of bitcoins are produced day after day.

So the amount of mining occurring (hashing capacity) doesn't drive the price, but instead is simply a reaction to price.

Because of how efficient ASIC mining hardware is, the cost of electricity is a trivially low percent of the mining revenue.  This contrasts how with GPUs the cost of electricity does now (... or soon will) exceed the revenue.  

So ASIC has (or will) demolished the profitability when mining using GPUs, but it has little to do with the exchange rate.  (other than, perhaps, miners investing their coins to buy ASIC hardware, and in turn ASIC hardware vendors flooding the market with coins when cashing them out for R&D and manufacturing costs.)

When there is a delta (as there is right now) between price of BTC and cost to produce BTC then every new BTC created is effectively being purchased for less than market value, and as of right now for a fraction of market value. So it would stand to reason that the vast majority will be converted to $$ or other currency immediately upon creation.

It's like insiders caching in options on a normal stock, which drives price down.

This does in fact have a become a market mover to the downside if the overall volume is low enough, which it seems to be. Your statement would be true if the outside interest in BTC overwhelmed the miners influence but it doesn't seem like we are there yet.

It seems to me that other than the recent media fueled bubble, mining is THE primary factor in determining price.

I'm a miner.  I don't sell my btc as soon as they are produced, and in fact, as a US citizen it would be illegal for me to do so without registering with FinCEN as a money transmitter.  It stands to reason you are just making shit up.

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter.

[gmaki]

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh).

You are making the classic mistake in thinking that in crypto coins that the cost of production has anything to do with the market price.

If there was no limit as to how many bitcoins could be mined, you would have a point.   Production would increase, and the flood of additional bitcoins would suppress the exchange rate until mining no longer is lucrative -- and an equilibrium would be reached.  

But with mining, difficulty adjusts and thus no matter how much additional mining capacity comes online, roughly the same amount of bitcoins are produced day after day.

So the amount of mining occurring (hashing capacity) doesn't drive the price, but instead is simply a reaction to price.

Because of how efficient ASIC mining hardware is, the cost of electricity is a trivially low percent of the mining revenue.  This contrasts how with GPUs the cost of electricity does now (... or soon will) exceed the revenue.  

So ASIC has (or will) demolished the profitability when mining using GPUs, but it has little to do with the exchange rate.  (other than, perhaps, miners investing their coins to buy ASIC hardware, and in turn ASIC hardware vendors flooding the market with coins when cashing them out for R&D and manufacturing costs.)

When there is a delta (as there is right now) between price of BTC and cost to produce BTC then every new BTC created is effectively being purchased for less than market value, and as of right now for a fraction of market value. So it would stand to reason that the vast majority will be converted to $$ or other currency immediately upon creation.

It's like insiders caching in options on a normal stock, which drives price down.

This does in fact have a become a market mover to the downside if the overall volume is low enough, which it seems to be. Your statement would be true if the outside interest in BTC overwhelmed the miners influence but it doesn't seem like we are there yet.

It seems to me that other than the recent media fueled bubble, mining is THE primary factor in determining price.

I'm a miner.  I don't sell my btc as soon as they are produced, and in fact, as a US citizen it would be illegal for me to do so without registering with FinCEN as a money transmitter.  It stands to reason you are just making shit up.

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter.

A: I agree with you, I am making things up. That's why I am posting in the "Speculation"  forum. Isn't that what speculation is?
B: You are a miner. Does your mining activities account for a significant percentage of BTC produced? Greater than 5%? No? Than your anecdotal data is irrelevant
C: It is illegal to sell BTC for $$ in the US? I did not know that. If that is the case I may have to revise my prediction downward significantly. I know for sure I will never buy a single BTC if I could never legally sell it, and neither would any other US Citizen.
D; Speaking of the US, isn't bitcoin usage, and mining a worldwide endeavor? So what does the legality in the US have to do with BTC price as a whole?

In any event, yes I am speculating. The reason I am doing so is I am attempting to make a decision between buying, mining, or walking away. How else is one supposed to make that decision without speculating on the future value of the item one is interested in?

[notme]

A.  Sure, but good speculation is done with educated guesses, not ass vapors.
B.  No, I have never been more than 1% of the network.  But when you claim most people in group x act in way y you should have several examples of individuals in group x that you can prove act in way y.  I see no such data and the other miners I know do not behave as you suggest.
C.  Try reading what I posted.  I even quoted the relevant portion.  The restrictions only apply to mined coins, and if you register there is no problem (although registration is an expensive and time consuming process).  Mined coins can however be spent without issue.  Yes it is fairly arbitrary, but that's how the USG rolls.
D.  Yes, bitcoin is worldwide, but if we use your arbitrary 5% threshold I'm sure that the US accounts for a significant amount of coins.

One is supposed to make such decisions by looking at historical data, understanding the math behind that data, and making educated estimations.  Posting bullshit on these forums will more often get you a through trolling than solid advice.

I would start with reading more about how the system works.  If it doesn't inspire awe in you it is not time for you to buy in yet.  Bitcoin is years from going mainstream.  If it does inspire awe, you'll know what to do.

[warpio]

Maybe the demand for ASICs was what pumped BTC so high in the first place. Now that the difficulty is skyrocketing the demand for ASICs is going back down and BTC is going back to its normal value.

[Stephen Gornick]

When there is a delta (as there is right now) between price of BTC and cost to produce BTC then every new BTC created is effectively being purchased for less than market value, and as of right now for a fraction of market value. So it would stand to reason that the vast majority will be converted to $$ or other currency immediately upon creation.

I'ld previously made the opposite argument.  Back when GPU profitability was low, those miners couldn't save their coins because they were needed to pay the electric bills.    When profitability skyrocketed, fewer coins were needed for the electric bill and thus more coins were saved.

There is one part to your argument that I'ld agree with though.  There were some people who mined rather than buy specifically so that there was no need to use an exchange to acquire coins used to make purchases.  So those people were probably first in line for ASICs and today are getting many more coins than their level of purchases require, thus they can then spend / trade their excess coins as they essentially are considered to have no cost.   I don't know how much of the mining capacity might fall in that category but it could have an impact, surely.

[notme]

Just so you know gmaki, I do not intend to pick on you personally.  But I have been here for a long time and you are far from the first person to make the claim you are making.  In the 2.5 years I've been on this forum (this isn't my only account), I have only seen 1 miner agree that they regularly sell out their take (username fcmatt).  I have seen many, many others view it as an alternative means to acquire bitcoins (as opposed to purchasing them outright).  I'm sure there are probably more miners who do sell out, but IMO it is not anywhere near "the vast majority".  I'll admit I could be wrong, but that's not what the evidence I have indicates.  If you have evidence I'm missing, please bring it to light rather than making unsubstantiated claims based on how you view bitcoin and mining since your view has led you to have no skin in the game.

[gmaki]

When there is a delta (as there is right now) between price of BTC and cost to produce BTC then every new BTC created is effectively being purchased for less than market value, and as of right now for a fraction of market value. So it would stand to reason that the vast majority will be converted to $$ or other currency immediately upon creation.

I'ld previously made the opposite argument.  Back when GPU profitability was low, those miners couldn't save their coins because they were needed to pay the electric bills.    When profitability skyrocketed, fewer coins were needed for the electric bill and thus more coins were saved.

There is one part to your argument that I'ld agree with though.  There were some people who mined rather than buy specifically so that there was no need to use an exchange to acquire coins used to make purchases.  So those people were probably first in line for ASICs and today are getting many more coins than their level of purchases require, thus they can then spend / trade their excess coins as they essentially are considered to have no cost.   I don't know how much of the mining capacity might fall in that category but it could have an impact, surely.

Alright. Let me ask you something. Why does anyone hold BTC?

Can we assume they eventually want to do something with it? what is that thing they want to do?

The "True believers" would use them to purchase goods and services as I understand it.

What motivates those who hold it though?

[PrintMule]

Maybe the demand for ASICs was what pumped BTC so high in the first place. Now that the difficulty is skyrocketing the demand for ASICs is going back down and BTC is going back to its normal value.

Indeed it was asic demand that drove btc price up.

[N12]

https://en.wikipedia.org/wiki/K%C3%BCbler-Ross_model#Stages

Looks like we are at Stage 2. Blame the miners, blame the traders, blame the mod.

[ImI]

Hello, i think asics are devaluating bitcoin and will continue to do so because they are extremely cost efficient (i mean electricity per gh). Can some1 with math skills count this: Compare the  price of btc(not the 250 buble)/electricity price per gh from gpu era (until Feb 2013) to today bitcoin price/electricity price per gh from asic era.

bullshit. if electricity costs per BTC are high. there will be more sold BTCs cause the miners have to pay their electricity bills. if costs are low there will be less sellers.

[TimJBenham]

I'm a miner.  I don't sell my btc as soon as they are produced, and in fact, as a US citizen it would be illegal for me to do so without registering with FinCEN as a money transmitter.  It stands to reason you are just making shit up.

Yeah we all know that all bitcoiners scrupulously follow all financial regulations!

[jamesc760]

The biggest and the baddest asic miner is in China, what does he care about US laws and regulations?