ASICs are the reason the price is dropping, and it will not stop.

[ecliptic]

I'm so sick of these "price is dropping because of X" bullshit threads. Price is dropping because it had no business being $150+ in the first place. It's way too early for that kind of valuation compared to actual current use as currency. It was a BUBBLE, and bubbles always pop.

I'm sick of the "Price had no business being 150+" threads. What would be a fair price for a random unit of a currency backed by ... nothing?  No economy, no product, no army?  This is so frickin' arbitrary.

There WAS a psuedo-floor to the price with GPUs, namely that many miners would not mine if the cost of electricity was more than the current market value of the coins they would get.

this did not set the exchange rate, but it did have a massive influence on people buying hardware, if not outright operating it.  people buy miners when ROI looks good, and GPU miners they would turn off if price was too low.

but ASICs are so power efficient, that this "price too low" is like, 3$/coin.  so the psuedo-floor has fallen dramatically.

So basically, if the price fell below price of electricty, people had to buy coins, they couldn't mine.  But why were they buying coins?  #1 - Because they were buying BTC Asics, #2 - investment, price going up.

Since ASICs basically will never turn off, anyone with them will keep them on all the time.  If you have an asic, you won't buy coins.  but the bigger problem is with the void of people no longer buying BTC for miners (or anything else) the exchange rate is going back to normal.  which only further puts pressure on people to sell coins to meet ROI

[mmeijeri]

How is that a pseudo-floor? The causality appears to run in the wrong direction for that.

[ecliptic]

How is that a pseudo-floor? The causality appears to run in the wrong direction for that.

It's a psuedo floor in the sense that if you have a GPU, and it costs you 300$ to mine 200$ worth of BTC, economics dictates that instead of doing that, you'll buy 200$ worth of BTC and save the 100$.

But it's unclear how this will work with ASICs since so few people have them compared to GPUs, and for probably several years they will always make more $ than they cost in electricity.

[johnyj]

The central bank create the fiat money and lend them out, those money will finance different project to create job/product/service and improve the economy

But as central banks in bitcoin economy(miner), they create the money but sell them in exchange for some other foreign currencies, because currently the bitcoin's value is too low

FED print 2.8 Billion new USD each day but bitcoin generate only 3600 new coins, how could this amount of coin drive any significant economy activity?

[ecliptic]

The central bank create the fiat money and lend them out, those money will finance different project to create job/product/service and improve the economy

But as central banks in bitcoin economy(miner), they create the money but sell them in exchange for some other foreign currencies, because currently the bitcoin's value is too low

FED print 2.8 Billion new USD each day but bitcoin generate only 3600 new coins, how could this amount of coin drive any significant economy activity?

Because USD has orders of magnitude larger trade volume and use than BTC, i wonder what it looks like if you compare the 2.8 B USD to the total amount of USD in existence/circulation, and the 3600 coins compared to the total amount in existence/circulation

[Coinseeker]

Throw a paper BTC wallet worth $1000 USD on the ground in any country and then throw a $100 USD bill on the ground next to it and see which one people "kill" each other to get to.

When the day comes that they go for the paper wallet, you can start comparing BTC to USD.  When the day comes that you can put a $100 wallet next to $100 bill and they go for the wallet, BTC will have won.  

Until then, King Dollar reigns supreme.  

[tokeweed]

Nature abhors a vacuum

Economics abhors a magic machine that prints money.

Here's what the network will look like at the end of 2013.  Here's what the exchange rate will be set (forced) to by ASICminer and the few others fighting over ASICminer's scraps dumping their coins desperately trying to claw their way to make ROI

Incoming hashrates:

ASICminer = 800 - 1000 TH
Avalon Chips = 300 TH
Avalon Batch 2 = 30 TH
KNCMiner=  200 - 400 TH
BFL = 100 - 1000 TH

Hash rate : 1430 TH/sec - 2730 TH/sec

Difficulty : 203396803 - 388302987


If ROI is fast (i.e. meets 100% ROI in less than a year) because exchange rate is good, difficulty will go up to compensate as people want to buy magic money making machines

if exchange rate is sane, difficulty will not go up because ROI is normal, i.e. one year.  This is what is happening now.  This is what will continue to happen.  So let's see what the exchange rate will be to make ROI sane @ 1 year


Marginal rate for plebs to buy hardware (KNC miner) : 17,500$ per TH/sec.

Price of BTC if set by plebs

Low diff: 49$
Max diff: 93$

Marginal rate for ASICminer to buy hardware : <10,000$ per TH/sec.  We'll be conservative and use 10,000$.  In reality it's probably closer to 5,000$, which means halve these numbers.

Price of BTC when set by ASICminer

Low diff: 11$
Max diff: 21$


Asicminer controls the price of bitcoin.  They are the reason the price has dropped.  It is impossible for anyone to get ANYWHERE near their level of efficiency except the ASIC designers themselves.  All of who currently charge an order of magnitude more for their chips than they actually pay for them.  ASICminer can get their chips for pennies on the dollar compared to you, and pays next to nothing for their industrial electricity.

There is nowhere near enough demand to buy coins to make up for the massive amount mined and dumped on a constant basis.  The exchange rate will continue to plummet until the value of dumped coins actually meets the amount of money flowing in for goods and services (practically non-existant at this time.)

And as the price drops nobody who isn't an idiot will consider holding coins as an investment

TL;DR - Unless YOU are ASICMiner, or you got an ASIC already (Avalon Batch #1) - You are screwed.  No, don't buy coins either, the price is going to keep dropping.

Oh, bonus points.  They EASILY have enough hardware to 51% the network.  They could break 75%.

angry gpu miner confirmed.

[Zendata]

Basically what OP is pointing towards despite his strange numbers, is over saturation. Anyone that has played an MMO and knows how a virtual economy works this is the same exact thing. More coins and not as much demand equals low value. As demand rises and coins disperse amongst the market, price goes up (Difficulty is the big player despite what people think). However the key factor is demand, if there is no demand/trade. There is no value, thus it continues to fall. This is parallel to the market I have projected towards BTC. Problem is, this is the key part and if it goes wrong. My whole idea is out the window.

[chufchuf]

Rigggght so all that asset protection literature no longer exists and now it's only miners that set price. You think those goldbugs have just disappeared from the planet and now they invest in stocks and bonds. Its not like anyone with money won't be interested in something finite and easily transportable. And a 10 million investment in ASIC, isn't that 1 dollar rise, so if a billion was invested in ASIC that'd explain the 100 dollar valuation!

[sidhujag]

price dropping is shaking out weak asic
holders as people hold longer and hash rices so will price. As asics get cheaper the incentive to hold will be higher so we are finding the equilibrium between cheap
btc and cheap asics through market price discovery. I already predicted all of this to happen so lets see how it keeps playing out.

[Bitcopia]

Basically what OP is pointing towards despite his strange numbers, is over saturation... More coins and not as much demand equals low value.

It is this simple, and there is no need to make overly complex assumptions. Roughly 3,600 new coins are created every day. There must be demand for 3,600 new coins every day for price to stay steady. We just fell off a period of massive amounts of panic buying. Most panic buyers have sold out at this point. However, for price to rise again, we're going to have to wait for more infrastructure and useful functions to come out of bitcoin. And they are coming. Patience is a virtue.

http://thegenesisblock.com/significant-merchant-improvements-planned-for-bitcoin-v0-9/

[mmeijeri]

angry gpu miner confirmed.

Heheh.

[mmeijeri]

And as the price drops nobody who isn't an idiot will consider holding coins as an investment

Not true, it will only dissuade those who were looking for a quick buck. If you believe BTC will be very valuable ten years from now, or at least has a decent chance of being very valuable, then lower prices may in fact lead you to spend more fiat money on buying BTC than you might otherwise have.

[Spaceman_Spiff]

Basically what OP is pointing towards despite his strange numbers, is over saturation... More coins and not as much demand equals low value.

It is this simple, and there is no need to make overly complex assumptions. Roughly 3,600 new coins are created every day. There must be demand for 3,600 new coins every day for price to stay steady. We just fell off a period of massive amounts of panic buying. Most panic buyers have sold out at this point. However, for price to rise again, we're going to have to wait for more infrastructure and useful functions to come out of bitcoin. And they are coming. Patience is a virtue.

http://thegenesisblock.com/significant-merchant-improvements-planned-for-bitcoin-v0-9/

Agreed, and thanks for the link!

[fulepp]

Basically what OP is pointing towards despite his strange numbers, is over saturation... More coins and not as much demand equals low value.

It is this simple, and there is no need to make overly complex assumptions. Roughly 3,600 new coins are created every day. There must be demand for 3,600 new coins every day for price to stay steady. We just fell off a period of massive amounts of panic buying. Most panic buyers have sold out at this point. However, for price to rise again, we're going to have to wait for more infrastructure and useful functions to come out of bitcoin. And they are coming. Patience is a virtue.

http://thegenesisblock.com/significant-merchant-improvements-planned-for-bitcoin-v0-9/

Agreed, and thanks for the link!

+1

& approx 3600 BTC / day is one of the fundamental. It was the case when there was only CPU mining or GPU mining and it will be the case when there will be just ASIC miners. I understand ppl are upset because they don't have the same income what they had earlier. It is an evolution, be part of it or... Just use your hard earned coins (trade, purchase, hold-on, etc.) and see where the price will go...

Don't forget you joined to this club because you believe in it (not the price but the idea). If you lost your faith you can leave at any time.

[bitleif]

I'm so sick of these "price is dropping because of X" bullshit threads. Price is dropping because it had no business being $150+ in the first place. It's way too early for that kind of valuation compared to actual current use as currency. It was a BUBBLE, and bubbles always pop.

I'm sick of the "Price had no business being 150+" threads. What would be a fair price for a random unit of a currency backed by ... nothing?  No economy, no product, no army?  This is so frickin' arbitrary.

I'm not arguing from a fundamental value perspective, sorry if my original wording was a bit harsh. What I mean is that from a technical perspective, seeing how quickly the price rose from say $30 to $150+, it was pretty clear from day one that this was a bubble. At least clear to me, been watching other markets for a few years and I've seen this movie before. Exponential rises never end well in the short term.

So from that technical perspective it's "natural" that we deflate back to eg. $30-$50 for a while, it doesn't need any external explanation. It also isn't necessarily bearish long term for Bitcoin.

[atlosas]

My prediction is that price will continue to drop until the market will be overwhelmed with asic meaning everyone could buy them without waiting in line for preoder. The difficulty would sky rocket and price would increase once more.

[crumbs]

I'm so sick of these "price is dropping because of X" bullshit threads. Price is dropping because it had no business being $150+ in the first place. It's way too early for that kind of valuation compared to actual current use as currency. It was a BUBBLE, and bubbles always pop.

I'm sick of the "Price had no business being 150+" threads. What would be a fair price for a random unit of a currency backed by ... nothing?  No economy, no product, no army?  This is so frickin' arbitrary.

I'm not arguing from a fundamental value perspective, sorry if my original wording was a bit harsh. What I mean is that from a technical perspective, seeing how quickly the price rose from say $30 to $150+, it was pretty clear from day one that this was a bubble. At least clear to me, been watching other markets for a few years and I've seen this movie before. Exponential rises never end well in the short term.

So from that technical perspective it's "natural" that we deflate back to eg. $30-$50 for a while, it doesn't need any external explanation. It also isn't necessarily bearish long term for Bitcoin.

I mostly agree with you, and sorry for the flip reply (my fail attempt at humor), but what i honestly don't get is why why valuing Bitcoin @ $30-$50 is any more realistic.  Regardless of how i feel about SR, it's Bitcoin's single "revolutionary" product  -- the only business for which Bitcoin is essential, the closest thing to an underlying economy.  There's simply no other metric i can think of with at least a veneer of credibility.  The rest, like ASIC-driven & speculation economies, are nothing more than turtles all the way down.

[Spaceman_Spiff]

I'm so sick of these "price is dropping because of X" bullshit threads. Price is dropping because it had no business being $150+ in the first place. It's way too early for that kind of valuation compared to actual current use as currency. It was a BUBBLE, and bubbles always pop.

I'm sick of the "Price had no business being 150+" threads. What would be a fair price for a random unit of a currency backed by ... nothing?  No economy, no product, no army?  This is so frickin' arbitrary.

Sorry, but the whole " backed by ... " discussion is such bullshit.  The only reason something needs backing, is if it is inherently crap to start with.  Fiat notes needed backing with gold because otherwise people that were used to using gold or silver as money before wouldn't have trusted them, as they would have been perceived as the Monopoly money that they are.  Infinitely printable Zimbabwe notes....
On the other hand, gold, silver and bitcoins are valued based on their properties, and how well they can serve as money or a store of value compared to the alternatives (+the non-monetary uses for silver and gold of course).

[crumbs]

I'm so sick of these "price is dropping because of X" bullshit threads. Price is dropping because it had no business being $150+ in the first place. It's way too early for that kind of valuation compared to actual current use as currency. It was a BUBBLE, and bubbles always pop.

I'm sick of the "Price had no business being 150+" threads. What would be a fair price for a random unit of a currency backed by ... nothing?  No economy, no product, no army?  This is so frickin' arbitrary.

Sorry, but the whole " backed by ... " discussion is such bullshit.  The only reason something needs backing, is if it is inherently crap to start with.  Fiat notes needed backing with gold because otherwise people that were used to using gold or silver as money before wouldn't have trusted them, as they would have been perceived as the Monopoly money that they are.  Infinitely printable Zimbabwe notes....

Fiat money is not backed by gold, that's how it differs from representative money.  Folks trust it just fine -- all the money in the world, including Bitcoin, is fiat.  With Bitcoin value halving in the past month, it may be unwise to draw attention to another dead currency.

On the other hand, gold, silver and bitcoins are valued based on their properties, and how well they can serve as money or a store of value compared to the alternatives (+the non-monetary uses for silver and gold of course).

In other words, during the last month Bitcoin's ability to store value & its usefulness for commerce has HALVED?  Not sure if that's what i'd call a great store of value