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Author Topic: Buy Bitcoins NOW! 30% harder to generate in 3-5 days!  (Read 2669 times)
ronaldmaustin
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February 15, 2011, 09:00:23 AM
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I have read that Bitcoins produced will be 30% less in the next 3-5 days, as the difficulty level will rise again.  True?  All the people dumping money into 5870's and 5970's very recently are going to need that much more money per Bitcoin to recover their investment on hundreds of dollars (if not thousands in some cases).  Also, with all the new entry, sales of "hash contracts", etc. does it not become that much harder to compete for the Bitcoins since only so many are produced over a given period?  Marginally, when one compares cost of electricity to current sales price of Bitcoins it seems like a good deal.  But adding the high equipment cost into the equation, along with increased difficulty in mining and HUGE recent entry into the market, I predict Bitcoins are stable at a US Dollar and will quickly go up in a very short time.  What do you think?
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Stephen Gornick
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February 15, 2011, 09:47:29 AM
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I have read that Bitcoins produced will be 30% less in the next 3-5 days, as the difficulty level will rise again.  True?  
The current difficulty is 25,998.  http://blockexplorer.com/q/getdifficulty
The next difficulty estimate is here: http://blockexplorer.com/q/estimate
If that level persists, that will mean the difficulty will rise more than 30% at the next retarget block  (in approx 3 days):
   http://blockexplorer.com/q/nextretarget

That's the fastest rate in quite a while:
  https://spreadsheets.google.com/pub?key=0AmcTCtjBoRWUdHVRMHpqWUJValI1RlZiaEtCT1RrQmc

See:  https://en.bitcoin.it/wiki/Difficulty

All the people dumping money into 5870's and 5970's very recently are going to need that much more money per Bitcoin to recover their investment on hundreds of dollars (if not thousands in some cases).  

If the BTC/USD exchange rate stays the same, then yes a higher difficulty than previously estimated will likely mean a longer length of time before the investment in hardware is returned by a producing rig.

But adding the high equipment cost into the equation, along with increased difficulty in mining and HUGE recent entry into the market, I predict Bitcoins are stable at a US Dollar and will quickly go up in a very short time.

Higher costs for mining really have little to do with BTC/USD exchange rate.   There does appear to be a correlation where when the BTC/USD price goes up, that rise in price attracts more investment in mining.  However, that is a relationship that lags by several weeks:
  http://bitcointalk.org/index.php?topic=2399.msg42269#msg42269

What do you think?
If the miners are cashing in their bitcoins that their rigs (or contracts) are producing because of the high investments made, then there will be more daily selling volume than what we've seen previously.  Prior to the runup to parity, there were many days that the per-day total number of bitcoins traded on Mt. Gox was well below the number of bitcoins minted for the day.  We are likely to see miners accumulate fewer, on average, than what has previously been seen.

Now will that increased selling activity cause the exchange rate to go down, I'm not even going to try to speculate.  I  might suggest that anyone contemplating selling first consider what this might mean:
  http://www.google.com/trends?q=bitcoin&ctab=0&geo=all&date=ytd

just a man
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February 15, 2011, 09:56:43 AM
 #3

I think a rise in diffficulty will also lead to a rise in prices as all the heavy miners see the increase and value bitcoins more, feeding demand on the market.

heh, I made an economic theory!:)

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February 15, 2011, 10:05:01 AM
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"Hey people, BUY NOW!!!" sounds like you've already bought some Wink

Variance is a bitch!
marcus_of_augustus
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February 15, 2011, 10:36:23 AM
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Quote
If the miners are cashing in their bitcoins that their rigs (or contracts) are producing because of the high investments made, then there will be more daily selling volume than what we've seen previously.  Prior to the runup to parity, there were many days that the per-day total number of bitcoins traded on Mt. Gox was well below the number of bitcoins minted for the day.

Man, some things never change, damn stingy miners sitting on there hard-won stash!

It's just like the Yukon, where's the whisky and wimmin round these parts pardners?

Those miners need to start spending and get this economy a rollin'!

just a man
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February 15, 2011, 10:50:34 AM
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Quote
If the miners are cashing in their bitcoins that their rigs (or contracts) are producing because of the high investments made, then there will be more daily selling volume than what we've seen previously.  Prior to the runup to parity, there were many days that the per-day total number of bitcoins traded on Mt. Gox was well below the number of bitcoins minted for the day.

Man, some things never change, damn stingy miners sitting on there hard-won stash!

It's just like the Yukon, where's the whisky and wimmin round these parts pardners?

Those miners need to start spending and get this economy a rollin'!

No they don't, hoarders value btc, so they hoard them and won't sell them unless for a higher price (much higher judging by expectation). Hoarders are therefore happy to buy bitcoin at a low price. So bitcoin is a commodity with a living market.

Eventually btc will mature such that people will want to cut out the middle man (dollar, Euro...) altogether and offer products/services directly in btc. At this point we'll start to know how many bitcoins or what fraction of one it'll cost to buy a decent pair of shows 'imported from the dollar economy' or whatever.

But who cares about buying products/services directly with btc at this stage anyway, nobody worries about buying stuff with lumps of gold or silver. Can't buy bugger-all with classic base-ball cards from the late 1800s either, doesn't bother the collectors, who pat their safes and smile slyly to themselves all the same.


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my attempt to learn about bitcoin was an unmitigated and disaster. who knew magic beans would turn out to be such a big fucking deal. my regret is the cost to others, which has shamed me.
Binford 6100
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February 15, 2011, 11:06:32 AM
 #7

I think a rise in difficulty will ...

rise in difficulty has no impact on bitcoin value IMO.
difficulty represents the cost of mining a coin (hw, electricity, etc) and has nothing to do with it's usability/value as a trade facilitator

the value based on the available services & goods is behind the exchange rates (again, my opinion).

You can't build a reputation on what you are going to do.
ronaldmaustin
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February 15, 2011, 11:19:42 AM
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"Hey people, BUY NOW!!!" sounds like you've already bought some Wink

Quite to opposite really, much to my disappointment.  I have generated thousands of bitcoins but sold them all daily for as low as 20 cents.  I am not sorry though.  I had my own economic model to pay off my 4 5970's and it's going according to plan.  I see MANY more people on here very recently with the same idea.  But the spike in prices, leading to huge mining increases, leading to increased difficulty by now 30% justifies the price at a dollar now, when no more than 20 cents was justifiable a few months back.  I think some real smart people on here see equipment cost is high to compete and sell mining contracts instead of pegging their hopes on future dollars per hash.  
ronaldmaustin
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February 15, 2011, 11:22:52 AM
 #9

Quote
If the miners are cashing in their bitcoins that their rigs (or contracts) are producing because of the high investments made, then there will be more daily selling volume than what we've seen previously.  Prior to the runup to parity, there were many days that the per-day total number of bitcoins traded on Mt. Gox was well below the number of bitcoins minted for the day.

Man, some things never change, damn stingy miners sitting on there hard-won stash!

It's just like the Yukon, where's the whisky and wimmin round these parts pardners?

Those miners need to start spending and get this economy a rollin'!

I think simply trading is enough.  I don't care what the currency can buy.  It has value as a model for usuable currency with features built in.  As long as someone will pay US Dollars for them, what do I care as a miner?  I sell em and someone else can keep or spend them.  It's like stock in a company.  If someone will trade me dollars for it, what do I care that I cannot trade stock for beer at the local 7-11?
ronaldmaustin
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February 15, 2011, 11:26:08 AM
 #10


Eventually btc will mature such that people will want to cut out the middle man (dollar, Euro...) altogether and offer products/services directly in btc. At this point we'll start to know how many bitcoins or what fraction of one it'll cost to buy a decent pair of shows 'imported from the dollar economy' or whatever.



No.  Right now I can tell you that if a decent pair of shoes costs $40, then it will cost approximately just over 40 Bitcoins for the shoes.  I can even tell you how many Euros a decent pair of shoes will cost using my secret proprietary method.  But I'll save that for later.
ronaldmaustin
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February 15, 2011, 11:48:37 AM
 #11

I think a rise in difficulty will ...

rise in difficulty has no impact on bitcoin value IMO.
difficulty represents the cost of mining a coin (hw, electricity, etc) and has nothing to do with it's usability/value as a trade facilitator

the value based on the available services & goods is behind the exchange rates (again, my opinion).

Respectfully . . . wrong on both counts I'd argue.  (1) If Bitcoins become 30% more difficult to generate then *I* as a miner value them more and want a higher price to cover the cost of the hardware, the electric bill etc.  Usability, value, price are all related but do not mean the same thing.  I am speaking of price.  I agree the value lies in Bitcoins as a trade facilitator.  But price is not strictly linked to value as a trade facilitator.  Gold's value is also as a trade facilitator but if it became 30% harder to mine tomorrow, I believe the price would increase. (2) The available goods and services currently obtainable with the bitcoin has almost nothing to do with the exchange rate.  People are not paying five times more this month than December because any new services are available.  The increase in price is tied to increased cost to manufacture a bitcoin along with a good deal of speculation that someone will pay more for it in US Dollars or Euros later.  That speculation is likely based upon the fact that bitcoin is a good method of secure private monetary exchange, as it is now, even if no goods or services are ever offered.  What goods and services can you go out and trade gold and stocks for?  
just a man
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February 15, 2011, 12:21:23 PM
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I think a rise in difficulty will ...

rise in difficulty has no impact on bitcoin value IMO.
difficulty represents the cost of mining a coin (hw, electricity, etc) and has nothing to do with it's usability/value as a trade facilitator

the value based on the available services & goods is behind the exchange rates (again, my opinion).

Respectfully . . . wrong on both counts I'd argue.  (1) If Bitcoins become 30% more difficult to generate then *I* as a miner value them more and want a higher price to cover the cost of the hardware, the electric bill etc.  Usability, value, price are all related but do not mean the same thing.  I am speaking of price.  I agree the value lies in Bitcoins as a trade facilitator.  But price is not strictly linked to value as a trade facilitator.  Gold's value is also as a trade facilitator but if it became 30% harder to mine tomorrow, I believe the price would increase. (2) The available goods and services currently obtainable with the bitcoin has almost nothing to do with the exchange rate.  People are not paying five times more this month than December because any new services are available.  The increase in price is tied to increased cost to manufacture a bitcoin along with a good deal of speculation that someone will pay more for it in US Dollars or Euros later.  That speculation is likely based upon the fact that bitcoin is a good method of secure private monetary exchange, as it is now, even if no goods or services are ever offered.  What goods and services can you go out and trade gold and stocks for?  

Strange, you seem to be agreeing with me, but said "no" to my post. I'm hurt. Sad

Bitcoin Weekly FTMFW: http://bitcoinweekly.com

The Bitcoin Sun (a new dawn): http://thebitcoinsun.com/

my attempt to learn about bitcoin was an unmitigated and disaster. who knew magic beans would turn out to be such a big fucking deal. my regret is the cost to others, which has shamed me.
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February 15, 2011, 03:16:06 PM
 #13

Assuming most members of the Bitcoin market are well informed, current prices already take into account future estimates of increased difficulty.

Do not waste your time debating whether Bitcoin can work. It does work.

"Early adopters will profit" is not a sufficient condition to classify something as a pyramid or Ponzi scheme. If it was, Apple and Microsoft stock are Ponzi schemes.

There is no such thing as "market manipulation." There is only buying and selling.
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February 15, 2011, 03:29:08 PM
 #14

The increase in price is tied to increased cost to manufacture a bitcoin



If you recall, the next block that will be generated will take about ten minutes to create and will contain exactly 50 bitcoins -- regardless if difficulty is 25,998 or 2,000,000.  The amount of currency issued occurs at the same rate regardless of the amount of mining activity.

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February 15, 2011, 04:52:27 PM
 #15

I think a rise in difficulty will ...

rise in difficulty has no impact on bitcoin value IMO.
difficulty represents the cost of mining a coin (hw, electricity, etc) and has nothing to do with it's usability/value as a trade facilitator

the value based on the available services & goods is behind the exchange rates (again, my opinion).

A rise in price will absolutely increase difficulty though. If they can be sold for more then it makes more sense to invest more in finding them which raises the difficulty.
Hal
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February 15, 2011, 09:27:00 PM
 #16

I have argued that difficulty should be proportional to price. Difficulty will rise until mining becomes unprofitable. Since the price recently tripled, difficulty should do the same.

Hal Finney
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February 15, 2011, 09:47:01 PM
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I have argued that difficulty should be proportional to price. Difficulty will rise until mining becomes unprofitable. Since the price recently tripled, difficulty should do the same.
Difficulty should actually increase roughly 20-fold to make ATI 5xxx GPU mining unprofitable. We have plenty of room for difficulty increases at current price levels.

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February 16, 2011, 01:00:26 AM
 #18

I have argued that difficulty should be proportional to price. Difficulty will rise until mining becomes unprofitable. Since the price recently tripled, difficulty should do the same.

Did mining become unprofitable before ?
I think profitability is fueled by bitcoin adoption rate.

If you don't own the private keys, you don't own the coins.
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February 16, 2011, 04:02:49 AM
 #19

The bitcoin tech. analysis guy is saying an ascending wedge (triangle) forming around 1.05 btc/$ ... I'm seeing a descending flag, either way something is gonna give and the timeframe is around the time of the next jump in difficulty.

So the miners/supply and the demand are both aware of this point in time as when they make their next decision and are susceptible to changing their expectations around then. The miners/supply have come down from above, 1.10, and sold down to 1.05, the demand has come from less than 1.00 and bought up to 1.05 .... myself I feel like a revisit of the 0.80 region is on the cards but it will be brief and then it is off up above the 1.10 to who knows where ... still some confidence issues to work through though it seems.

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February 16, 2011, 04:06:58 AM
 #20

Doesn't the difficulty retarget basically every two weeks?

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