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Author Topic: What is the impact of massive mining gold rush to BTC value ?  (Read 909 times)
EricKennedy
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December 12, 2013, 11:13:24 PM
 #1

There has been recently a huge interest into BTC mining.

The BTC supply is constant, so it's not because miners are legion that more BTC will be minted. However it impacts the distribution of new coins : instead of a few individuals reaping the benefits on the mining, hundreds of thousands of miners will receive daily small amounts in uBTC and mBTC (Group buying, mining contracts).
As it is improbable that everyone will decide to sell their mBTC every day, would this mean that liquidity of BTC (people selling their BTC for fiat) will drop, rising its value ?

We can easily estimate that hundreds of millions of dollars have been invested in mining rigs. Logicaly, people expect to get back at least this value on a very short term (a few month), as difficulty will skyrocket and anhihilate the mining value quickly. So this would imply that the 432 000 BTC created in 4 month have to value at least the hardware investment, reinforcing a $1,000+ position for BTC.
Is it because people massively invested in mining (mainly on pre ordering, so in a very speculative way), that BTC rocketed recently to $1,0000 to justify future income ?

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BitchicksHusband
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December 13, 2013, 12:23:14 AM
 #2

Most likely yes.  People don't like to sell at massive losses.

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December 13, 2013, 08:02:51 AM
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The number of bitcoins mined each day is a very small fraction of the supply of bitcoins at exchanges. Miners have very little effect (if any) on the bitcoin exchange rate.

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December 13, 2013, 10:36:34 AM
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It really should not matter. The same amount of bitcoins are still being created regardless of how much mining is going on, so its not like inflation will occur. The only people getting screwed are the miners who calculated based on a given difficulty or an estimated difficulty rise who will now have to mine for much longer in order to pay back the cost of their rigs. That is, if they are ever able to do so given power concerns, new hardware making old miners obsolete before they can make back the costs of the old hardware, etc.
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December 13, 2013, 12:34:04 PM
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The number of bitcoins mined each day is a very small fraction of the supply of bitcoins at exchanges. Miners have very little effect (if any) on the bitcoin exchange rate.

Currently it is still large, will get less after another 2-3 reward halving, my estimation of daily coin supply is 5000 - 6000 coins. Short term speculation not included

Although the exchange handle hundreds of thousands of volume of transaction, the added coin supply mostly come from mining, all the existing holders can only dump their coins for once, and they don't have the motivation to dump more than 10% of their holdings per year



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December 13, 2013, 07:19:47 PM
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The number of bitcoins mined each day is a very small fraction of the supply of bitcoins at exchanges. Miners have very little effect (if any) on the bitcoin exchange rate.
Currently it is still large, will get less after another 2-3 reward halving, my estimation of daily coin supply is 5000 - 6000 coins. Short term speculation not included
Although the exchange handle hundreds of thousands of volume of transaction, the added coin supply mostly come from mining, all the existing holders can only dump their coins for once, and they don't have the motivation to dump more than 10% of their holdings per year

The total volume of bitcoins traded daily averages about 160K. The total volume of bitcoins mined daily averages more than 3600 (it depends on the rate of increase of hash rate), but currently it is about 4500.

That's about 3% of total volume, and it assumes that all mined coins are sold. My guess is that newly mined coins only make up about 1% of total trading volume and I consider that to be very small, especially considering the volatility of trading volume.

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