Death to the mercenary miners!

[billyjoeallen]

Miners who sell immediately, injecting excess liquidity and driving the price down are in a process of slow motion suicide and I say it couldn't happen to a nicer bunch of mercenaries.  Those evil hoarders who mined, saved, and believed in the project made a substantial profit and I say good for them.

I didn't buy GPUs. I bought coins. My coins don't become obsolete. My coins don't immediately plummet in value when used. My coins take up no space. They don't generate heat or make noise. My coins don't require electricity, so I can hold them for no cost. Your mining rigs will lose you money if the price keeps dropping.

I didn't quit my day job. I can afford to wait. Time is on my side, but not on yours.  You'r only goal was to extract profits from speculators like me. Now, your future looks bleak while I see many buying opportunities ahead for myself.

Eventually, mercenary miners will drop out when the cost of generating coins exceeds the price they can get for them. Then they will stop their rigs and the only miners left will be true believers who don't sell. then the price will start to rise and continue to rise until the mercenaries jump back in.  Then the price will start falling and the whole cycle will repeat until new software and infrastructure render our coins so valuable that even the mercenaries can stay with no ill effects.  BUT, if they go broke in the mean time, good riddance.

[1714517877]

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[FlipPro]

Miners who sell immediately, injecting excess liquidity and driving the price down are in a process of slow motion suicide and I say it couldn't happen to a nicer bunch of mercenaries.  Those evil hoarders who mined, saved, and believed in the project made a substantial profit and I say good for them.

I didn't buy GPUs. I bought coins. My coins don't become obsolete. My coins don't immediately plummet in value when used. My coins take up no space. They don't generate heat or make noise. My coins don't require electricity, so I can hold them for no cost. Your mining rigs will lose you money if the price keeps dropping.

I didn't quit my day job. I can afford to wait. Time is on my side, but not on yours.  You'r only goal was to extract profits from speculators like me. Now, your future looks bleak while I see many buying opportunities ahead for myself.

Eventually, mercenary miners will drop out when the cost of generating coins exceeds the price they can get for them. Then they will stop their rigs and the only miners left will be true believers who don't sell. then the price will start to rise and continue to rise until the mercenaries jump back in.  Then the price will start falling and the whole cycle will repeat until new software and infrastructure render our coins so valuable that even the mercenaries can stay with no ill effects.  BUT, if they go broke in the mean time, good riddance.

The top miners have alot of USD to you know  . They will be there right with you when the buying frenzy comes...

[myhoho]

It's not that simple. Like good and evil. All your bitcoins used to consume some electricity and so on... Miners may sell their equipment and most probably  average miner made much more money than average trader.
It's all about great game of chess. There are different figures, but we have the same opposition, same enemy .

[gnaget]

Miners must sell regularly because they have expenses in the form of electricity and new equipment to purchase.  It isn't wise to sell all BTC though, as next year the reward for block generation will drop to 25, which means a lot less BTC will be introduced into the market.  I expect the price to jump really quick when that happens.

[DrKennethNoisewater]

Mining is a crucial part of the equation, so whether someone panics and sells their mining rig before recouping the costs or panic sells their 1000 BTC at $10, only to watch it bounce right back to $15.......its simply a bad decision.

There's room for miners and speculators but doing either successfully is never easy.

Just like in trading the US equity markets, If you are under the gun to make money (trading or mining) then your are doomed for failure most of the time.

Mine some coins, buy some coins, sit back and watch the show.......................

Weeeeeee

DKN

[arnoldrimmer]

How is the Price driven down can someone explain it to me?

[BitcoinHoarder]

Miners must sell regularly because they have expenses in the form of electricity and new equipment to purchase.

This is just not true at all.  I run a large mining operating and I have never sold a single coin.  I pay for my electricity through other sources of income (and I suspect many other do also).  My point being that many miners use mining as a way to get in without using the exchanges.  People miss this point *all the time*.  Mining costs a lot of money, but so does buying it on the exchange (it takes US dollars to buy the bitcoins).  Mining is an easy way to use USD to buy Bitcoins.  I'm not buying them in the traditional sense (purchasing them on an exchange, like mtgox), but I am buying them in terms of computer parts that generate bitcoins.

[Serge]

It could be that the rest of July may be a good buying opportunity   btc and used hardware wise.  All who wanted to get a hold of BTC at lower rates - this is your time now.

[arnoldrimmer]

How is the Price driven down can someone explain it to me?

bumb

[enmaku]

When I entered the bitcoinverse I looked things over and saw two options: mine or speculate.

Now I've got a fair economic background/education and I probably could have done pretty well for myself as a speculator, but my technical side is MUCH stronger so I went with the position that better suited my skills. I sell some of my coins, I hold others and I even do a bit of speculative trading with a few. After amortized cost of hardware and electricity, I've paid under $5 for each BTC mined, which is a pretty good bargain compared even to the currently low/stagnant market prices.

Mining is nothing more than a method for the more technical among us to obtain BTC at a fraction of market value and if more people looked at it in this light rather than as an effortless source of income, the markets would probably be much better off.

[tvbcof]

When I entered the bitcoinverse I looked things over and saw two options: mine or speculate.

Now I've got a fair economic background/education and I probably could have done pretty well for myself as a speculator, but my technical side is MUCH stronger so I went with the position that better suited my skills. I sell some of my coins, I hold others and I even do a bit of speculative trading with a few. After amortized cost of hardware and electricity, I've paid under $5 for each BTC mined, which is a pretty good bargain compared even to the currently low/stagnant market prices.

Mining is nothing more than a method for the more technical among us to obtain BTC at a fraction of market value and if more people looked at it in this light rather than as an effortless source of income, the markets would probably be much better off.

When I decided I wanted some exposure to bitcoin it seemed to me that an efficient mining setup would exceed the amount of $$$ I wanted to have in play in the near future.  Also, that there were significant risks in terms of overall mining participation.  For that reason, I choose to simply 'speculate'.

I cannot begrudge any miner for any liquidation strategy they may choose...they did the work and carry the water to make the system sound at this point so what they do with their earnings is not my business.  Indeed, I may well continue to accumulate so any miners who 'mis-manage' their liquidations and cause price dips on the exchanges are doing me a big favor.  Similar to the (purported) paper shorts in the PM markets over the years...if they have the half the impact on price that many PM-bugs assert, I owe them a giant debt of gratitude.  (Though I am sure I would feel differently if/when I wish to be a seller

If miner liquidations are a major reason for the decline in BTC value and subsequent loss of confidence by otherwise interested participants, that would be unfortunate.  But I actually doubt that this is a large factor though I have nothing more than a hunch to back this up.

[Lupus_Yonderboy]

Miners who sell immediately, injecting excess liquidity and driving the price down are in a process of slow motion suicide and I say it couldn't happen to a nicer bunch of mercenaries. 

That's a nice fantasy, but the volume of trading on Mt.Gox for the last week alone has been significantly higher than all the bitcoins mined for the entire last month.

What most people aren't realizing is that the huge sell orders are not coming from miners, well not any that started after March, anyway. It's the people who have tens of thousands of bitcoins that are putting up the 'sell' walls you see on the charts. Simply put, some early adopters are slowly cashing out. Makes one wonder about the actual long term viability of the project.

[FlipPro]

Miners who sell immediately, injecting excess liquidity and driving the price down are in a process of slow motion suicide and I say it couldn't happen to a nicer bunch of mercenaries. 

That's a nice fantasy, but the volume of trading on Mt.Gox for the last week alone has been significantly higher than all the bitcoins mined for the entire last month.

What most people aren't realizing is that the huge sell orders are not coming from miners, well not any that started after March, anyway. It's the people who have tens of thousands of bitcoins that are putting up the 'sell' walls you see on the charts. Simply put, some early adopters are slowly cashing out. Makes one wonder about the actual long term viability of the project.

Some early adopters are already planning on heavily investing right back into the community...

[billyjoeallen]

How is the Price driven down can someone explain it to me?

by increasing supply, obviously.

[haploid23]

there's also the factor of newly mined coins that holds some kind of value for some people. when you mine, then you know these virgin coins has never been touched by anyone else  , whereas if you only buy coins, you know for sure it has already been "used". like mentioned before in this thread, mining is not always about selling right away for a profit. it's about the value of newly minted coins, which pure traders will never see.

[billyjoeallen]

Miners who sell immediately, injecting excess liquidity and driving the price down are in a process of slow motion suicide and I say it couldn't happen to a nicer bunch of mercenaries. 

That's a nice fantasy, but the volume of trading on Mt.Gox for the last week alone has been significantly higher than all the bitcoins mined for the entire last month.

No, of course not, you genius. It couldn't possibly have anything to do with the free trades and the inevitable high frequency churn it facilitates, could it?   Couldn't possibly be the same coins traded over and over, right? It must pain you to know that if you were twice as smart, you'd still be stupid.

[kokojie]

Miners must sell regularly because they have expenses in the form of electricity and new equipment to purchase.  It isn't wise to sell all BTC though, as next year the reward for block generation will drop to 25, which means a lot less BTC will be introduced into the market.  I expect the price to jump really quick when that happens.

Not next year, it's 2013

[dooglus]

Not next year, it's 2013

We're currently on block 136938.
Block reward halves after block 210000.
New blocks happen about once every 10 minutes.

Code:

>>> time.ctime(time.time() + (210000 - 136938)*60*10)
'Thu Dec  6 21:12:24 2012'

At that rate, we can expect the first halving in December 2012.

This makes sense because the difficulty lags behind the network speed, and so blocks have been generated a little more quickly than every 10 minutes, meaning the reward will halve to 25 BTC in a little less than 4 years from 9-Jan-2009 (the date block 1 was found).

Code:

>>> (time.time() - time.mktime((2009,1,9,02,54,25,0,0,0))) / 136938 / 60
9.678566721912704

The average time between blocks so far has been 9.7 minutes, not 10 minutes.

[error]

there's also the factor of newly mined coins that holds some kind of value for some people. when you mine, then you know these virgin coins has never been touched by anyone else  , whereas if you only buy coins, you know for sure it has already been "used". like mentioned before in this thread, mining is not always about selling right away for a profit. it's about the value of newly minted coins, which pure traders will never see.

For many of the purposes that generated coins would be valuable, coins purchased from a large exchange work just as well, or perhaps even better.

[dooglus]

And of course, if the blocks continue to be found more frequently than every 10 minutes, that halving will be brought even further forward.  Here's the calculation if the average block finding rate continues:

Code:

>>> block=136943; time.ctime(time.time() + (210000 - block)*60*((time.time() - time.mktime((2009,1,9,02,54,25,0,0,0))) / block / 60))
'Tue Nov 20 12:45:31 2012'

blocks 136939 through 136943 (5 blocks) were found in the last 8 minutes!

[Lupus_Yonderboy]

No, of course not, you genius. It couldn't possibly have anything to do with the free trades and the inevitable high frequency churn it facilitates, could it?   Couldn't possibly be the same coins traded over and over, right?

So you are saying the entire volume has been miners selling off their immediate gains and then bots recycling the coins back and forth? Really? So what about the guy who dumped ~10k bitcoins in the market last Monday? Was that miners instantly selling their earnings or bots? Or how about any of the other large (>1000 btc) asks that have been there all last week and weekend, effectively stalling the market and causing its gradual decline?

Nice way to try and shift the blame to miners tho. Here, let me tell you a little something, boy. I'm cracking 6 Ghash/s and I am making ~3btc per day. Your average miner, he's got a lot less hardware and is lucky to be making even .75 btc/day. I highly doubt they are taking their .75 btc that they mined that day and immediately selling it. And even if they did, your precious bots would eat those btc up without even blinking. Miners aren't the ones causing excess supply in the market, early adopters and speculators who hold a lot of bitcoins are.

I do hope that your little fantasy world is warm and that everyone likes you there. Out here in the real world we know better. Do you honestly believe that load of horseshit you spewed at the top of this thread? If so then you are definitely one useful idiot. If you don't believe it, then you are probably one of the ones trying to quietly exit stage left before the inevitible panic selling begins.

[Rob P.]

How'd you get your coins?  Oh yea, Miners who sold them.

Nuff said.

[DrKennethNoisewater]

Never, Never, Never, Under any Circumstances............................

Underestimate the power of STUPIDITY!

 

DKN

[repentance]

If you're in it for the long haul and not planning on selling your own coins in the short or medium term, then why are you concerned about the current downward pressure on price?

[haploid23]

How'd you get your coins?  Oh yea, Miners who sold them.

Nuff said.

yes but the amount of coins newly introduced into the market is less than the old coins that are constantly being bought and sold again.

[repentance]

How'd you get your coins?  Oh yea, Miners who sold them.

Nuff said.

yes but the amount of coins newly introduced into the market is less than the old coins that are constantly being bought and sold again.

Which indicates that a lot of traders are speculating - which is no less mercenary than miners cashing out as they go and is a perfectly legitimate reason to enter a market anyway. 

[billyjoeallen]

How'd you get your coins?  Oh yea, Miners who sold them.

Nuff said.

Yeah and thanks for that. Got some more at $12.8 yesterday :-)

[FreeMoney]

How is the Price driven down can someone explain it to me?

bumb

At any given time there is a set of people with a desire to buy at certain prices. A seller generally tries to find the highest price and satisfies it with a sale, now that is desired and the highest desired price is a little lower. Make sense? It's pretty easy to see inside of one market, but the forces exist beyond any one meeting place of buyers and sellers.

[FreeMoney]

"Mercenary miners" are totally fine imo. They are selling us coins and security. Really there isn't anyone anywhere selling something better 

There is no reason at all that the people with hardware and tech skills need or should be the same ones who provide the value to coins by desiring and holding them in the face of high offers.

[Rob P.]

How'd you get your coins?  Oh yea, Miners who sold them.

Nuff said.

yes but the amount of coins newly introduced into the market is less than the old coins that are constantly being bought and sold again.

6.853 million (in circulation) < 14.147 million (left to be mined)

Nuff said.

[billyjoeallen]

So you are saying the entire volume has been miners selling off their immediate gains and then bots recycling the coins back and forth? Really?

yes, the downward pressure in excess of demand is almost entirely caused by mercenary miners, the fools who made long-term capital investments based on short-term trends and who are now trying to minimize their losses at the expense of everyone who is working toward the long-term stability and viability of the project.  The last laugh is on them, however.  They need us more than we need them.

I got in again below $13 thanks to their desperation. :-D

[Rob P.]

So you are saying the entire volume has been miners selling off their immediate gains and then bots recycling the coins back and forth? Really?

yes, the downward pressure in excess of demand is almost entirely caused by mercenary miners, the fools who made long-term capital investments based on short-term trends and who are now trying to minimize their losses at the expense of everyone who is working toward the long-term stability and viability of the project.  The last laugh is on them, however.  They need us more than we need them.

I got in again below $13 thanks to their desperation. :-D

Wrong.  This can easily be proven.

6 blocks / hour = 144 blocks / day
144 blocks = 7,200 BTC / day
Today's volume at Mt. Gox (so far): 113,985

So, if every miner sold every coin, as soon as they mined it, they would only amount to 6% of the total volume (so far, gets smaller as the day goes on).  Clearly, miners selling coins as soon as they mine them has very little impact on the total volume of trades happening.  As a miner selling a coin can only happen once.  That same coin is then being bought and sold, on average, another 16 times in that day.  Miners aren't doing it, speculators are.

Umad?

 

[billyjoeallen]

So you are saying the entire volume has been miners selling off their immediate gains and then bots recycling the coins back and forth? Really?

yes, the downward pressure in excess of demand is almost entirely caused by mercenary miners, the fools who made long-term capital investments based on short-term trends and who are now trying to minimize their losses at the expense of everyone who is working toward the long-term stability and viability of the project.  The last laugh is on them, however.  They need us more than we need them.

I got in again below $13 thanks to their desperation. :-D

Wrong.  This can easily be proven.

6 blocks / hour = 144 blocks / day
144 blocks = 7,200 BTC / day
Today's volume at Mt. Gox (so far): 113,985

So, if every miner sold every coin, as soon as they mined it, they would only amount to 6% of the total volume (so far, gets smaller as the day goes on).  Clearly, miners selling coins as soon as they mine them has very little impact on the total volume of trades happening.  As a miner selling a coin can only happen once.  That same coin is then being bought and sold, on average, another 16 times in that day.  Miners aren't doing it, speculators are.

Umad?

I already addressed that. It's churn due to free trading. Put another way, if NO (as in zero) miners sold any of their coins, do you still think prices would fall? 

[skyhigh]

I already addressed that. It's churn due to free trading. Put another way, if NO (as in zero) miners sold any of their coins, do you still think prices would fall? 

You are really something special. IF NO miners would ever sell any ( as in zero ) coins, SMARTS like you wouldn't hold any. There would be no price for them also. How's that brainiac ?!

[Rob P.]

I already addressed that. It's churn due to free trading. Put another way, if NO (as in zero) miners sold any of their coins, do you still think prices would fall? 

I called my econ prof, he said, "Yes" and I agree with him.

You see, supply > demand right now, so the price falls.
If supply < demand, the price would rise.

You've made the mistake of assuming the only "supply" of coins is miners.  That's not true.  The BULK of the supply is actually people who already own coins putting them up for sale.

The 7200 coins per day are not a "significant" supply to the market.  The other 105,000 coins being offered for sale ARE.  So even if the miners' coins were gone, the price would still fall, because people aren't buying coins for what sellers are currently asking.  As evidenced by the MUCH larger trading volume. 

Now, if the trading volume in a day was just the 7200 coins for that day, you'd have a point.  Since it's 16X that, you don't. 

[Grinder]

I didn't quit my day job. I can afford to wait. Time is on my side, but not on yours.  You'r only goal was to extract profits from speculators like me. Now, your future looks bleak while I see many buying opportunities ahead for myself.

So you're basically really angry at the miners because they sold you coins for a much lower price than you think they are worth. Has anything ever made you happy?

[billyjoeallen]

I called my econ prof, he said, "Yes" and I agree with him.

Appeal to authority is a logical fallacy, especial econ professors.

You've made the mistake of assuming the only "supply" of coins is miners.  That's not true.  The BULK of the supply is actually people who already own coins putting them up for sale.

I haven't made that assumption at all. I claim that without additional coins being mined and brought to market, supply would equal demand and price would be stable OR supply would be less than demand and prices would rise until supply did equal demand.

The 7200 coins per day are not a "significant" supply to the market. 

yes. yes they are. imagine an enclosed 5 gallon tank that is completely filled with water. Now add another pint of water. What do you think that does to the pressure? That's why small cap assets fluctuate so wildly.

[Grinder]

I haven't made that assumption at all. I claim that without additional coins being mined and brought to market, supply would equal demand and price would be stable OR supply would be less than demand and prices would rise until supply did equal demand.

You're still wrong, though. There's nothing forcing those who buy coins to keep them or not sell unless the price is at least what they paid for them. The main reason why there is demand for bitcoins is that buyers expect the price to go up. When enough people stop expecting that they will try to sell. That's why the price is no longer $30, not because miners sell coins.

[billyjoeallen]

I haven't made that assumption at all. I claim that without additional coins being mined and brought to market, supply would equal demand and price would be stable OR supply would be less than demand and prices would rise until supply did equal demand.

You're still wrong, though. There's nothing forcing those who buy coins to keep them or not sell unless the price is at least what they paid for them. The main reason why there is demand for bitcoins is that buyers expect the price to go up. When enough people stop expecting that they will try to sell. That's why the price is no longer $30, not because miners sell coins.

That's like saying the main reason why the Yankees won is because the Red Sox lost. It's true, but it doesn't explain anything.

[Grinder]

That's like saying the main reason why the Yankees won is because the Red Sox lost. It's true, but it doesn't explain anything.

It's only necessarily true if they played in the same game. There is an almost infinite amount of options which can make you wrong, so if you can't see a single one of them it must be because you don't want to.

[billyjoeallen]

That's like saying the main reason why the Yankees won is because the Red Sox lost. It's true, but it doesn't explain anything.

It's only necessarily true if they played in the same game. There is an almost infinite amount of options which can make you wrong, so if you can't see a single one of them it must be because you don't want to.

There are an infinite number of options that CAN make me wrong, but none that actually do. You don't seem to understand the difference between proximate cause and cause-in-fact. I'm arguing cause-in-fact and you are disputing proximate cause. Basically you are arguing against a position I am not even taking.

[kjj]

You've made the mistake of assuming the only "supply" of coins is miners.  That's not true.  The BULK of the supply is actually people who already own coins putting them up for sale.

I haven't made that assumption at all. I claim that without additional coins being mined and brought to market, supply would equal demand and price would be stable OR supply would be less than demand and prices would rise until supply did equal demand.

This is just a restatement of the notion of supply and demand.  We pretty much accept it as an axiom that prices will go higher, lower or sideways if supply is increased, decreased, or maintained, when demand is held constant.

Your real argument seems to be that some portion of the people selling bitcoins are doing so in error.  They would be better off, in your opinion, if they would only stop doing things than they think are right, in their opinion.

Be careful when thinking that you can make decisions better for everyone else than they can for themselves.  There are horrible things lurking down that road.

The 7200 coins per day are not a "significant" supply to the market. 

yes. yes they are. imagine an enclosed 5 gallon tank that is completely filled with water. Now add another pint of water. What do you think that does to the pressure? That's why small cap assets fluctuate so wildly.

Liquids don't really compress.  The pressure would be infinite unless the tank burst, and you don't need a pint for that, even just a drop will do.  Pedantic, I know, but this post got me in the mood.

[OgNasty]

High volume is not a measure of miners selling bitcoins, OR of speculators selling/buying... For example...

1 man mines a coin, sells it.  This causes price to drop.

A trading bot buys coin, resells it $0.05 higher than buys it again $0.05 cheaper, rinse and repeat.  This causes high volume.

Conclusion:
Miners selling coins is what is driving the price down.  Trading bots buying and selling coins repeatedly is driving the volume up and stabilizing the price so you can see the nice steady decline that miners liquidating their coins are causing.

I hope that is simple enough.  

To make another point, if 7,200 coins are being created daily, it would take an injection of around $100,000 per day just to keep the price stable.  Lets say 1/2 of those miners are not selling the coins... That is still $50,000/day that needs to be injected into bitcoins from other currencies.  Obviously, we are not seeing that, hence, the price is declining.


*I don't believe early adopters selling coins are causing the price to drop.  They are in no hurry to cash out or they already would have and wouldn't be causing a slow motion crash due to them being early adopters and believing in the BTC...

[billyjoeallen]

You've made the mistake of assuming the only "supply" of coins is miners.  That's not true.  The BULK of the supply is actually people who already own coins putting them up for sale.

I haven't made that assumption at all. I claim that without additional coins being mined and brought to market, supply would equal demand and price would be stable OR supply would be less than demand and prices would rise until supply did equal demand.

This is just a restatement of the notion of supply and demand.  We pretty much accept it as an axiom that prices will go higher, lower or sideways if supply is increased, decreased, or maintained, when demand is held constant.

Your real argument seems to be that some portion of the people selling bitcoins are doing so in error.  They would be better off, in your opinion, if they would only stop doing things than they think are right, in their opinion.

Be careful when thinking that you can make decisions better for everyone else than they can for themselves.  There are horrible things lurking down that road.

The 7200 coins per day are not a "significant" supply to the market. 

yes. yes they are. imagine an enclosed 5 gallon tank that is completely filled with water. Now add another pint of water. What do you think that does to the pressure? That's why small cap assets fluctuate so wildly.

Liquids don't really compress.  The pressure would be infinite unless the tank burst, and you don't need a pint for that, even just a drop will do.  Pedantic, I know, but this post got me in the mood.

My point exactly. Bitcoin has relatively low capitalization right now which means that small changes in supply or demand cause dramatic changes in price.  This volatility scares away investors both in coins themselves but also builders of infrastructure, which is worse.  It works for me, because I buy coins on the cheap, but it is bad for both the miners themselves and for the growth of the Bitcoin economy. It's better for everybody if we wait and sell near all time highs. That way we can reduce volatility and make money rather than increase volatility and lose money.  It's win-win or lose-lose.