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Author Topic: Why are some vouching for <1 USD BTC?  (Read 1890 times)
grod
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September 12, 2011, 06:31:14 AM
 #21

Tacotime - a falling difficulty does not compel a lower price, nor does a rising difficulty compel a higher price. Price is set by the supply of coins for sale and quantity of buyers, that's all.

If the supply of coins for sale is not affected by the difficulty, and the quantity of buyers is not affected by the difficulty, then the difficulty doesn't matter.

There are two ways to obtain BTC.  One way is to invest in mining hardware, the other is to direct buy.

If market prices are $32/BTC and current low difficulty makes the cost of BTC 75 cents, which way do you think prices (and difficulty) went?   If market prices are $7/BTC and cost to mine is $3.50, which way do you think prices are likely to go?
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BCEmporium
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September 12, 2011, 06:48:34 AM
 #22

grod, setting a mining rig requires tech skills, and still the dificulty will go up if hashrate goes up, so the risk is high. I wonder how many already got sink in useless hardware thinking such way...
grod
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September 12, 2011, 07:01:32 AM
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grod, setting a mining rig requires tech skills, and still the dificulty will go up if hashrate goes up, so the risk is high. I wonder how many already got sink in useless hardware thinking such way...

When bitcoin was at $30 there was a link from one of the profitability calculators to a place that'd sell you a ready to mine rig, calculated to pay for itself in about 20 days.  The skills required were roughly "plug it in, sit back, and watch your ass and bank account grow."  During those times there was no discussion possible on whether it's more effective to buy or mine.  As a result 75% of the current network capacity got added over about 3 weeks while prices imploded.

Also, seriously, this is a geek's currency.  I'd go out on a limb and say approximately 100% of the current bitcoin audience capable of understanding, installing and using the bitcoin client are also capable of installing a video card and any number of mining packages.  The amount of effort here is still less than dollars -> bank -> dwolla -> gox -> coins.

Anyhoo, even now I'm looking at a cost to mine of $3.50 and a market price of $6.  Not worth wear and tear on my hardware, but for a professional mining operation it's definitely worth mining and taking a dump on speculators as soon as the coins appear.



tacotime
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September 12, 2011, 02:22:46 PM
 #24

You want to compare a market of goods with a currency market?! What you said looks like you're talking about oranges or potatos, there yes, quantity affects price. For currencies, which is what bitcoin is, such rules don't apply. An 1 usd doesn't cost more or less to produce than 100 usd.

Because of its deflationary nature bitcoin is more akin to a commodity than a currency...  You don't just print bitcoin when you need more bitcoin.  You need to invest in mining equipment and electricity.

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Tacotime - a falling difficulty does not compel a lower price, nor does a rising difficulty compel a higher price. Price is set by the supply of coins for sale and quantity of buyers, that's all.

If the supply of coins for sale is not affected by the difficulty, and the quantity of buyers is not affected by the difficulty, then the difficulty doesn't matter.

Right, but the speculator is over time not likely to be stupid and purchase something for $5 that only cost $2 to produce.  These are common markups for businesses that have transportation fees, employees to pay, locations to maintain and pay taxes on... they don't make sense for something like mining.  The bottom line is: Why would anyone pay for this?

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