How to understand what the miners are doing

[franky1]

to get to some peoples points as it seems this topic is about some principles that go back as far as hal finney and his understanding of the economy. and something i mentioned in other topics

1. it does not matter if 10 people can mine for $7500 and 10 people can mine for $5000. the price for the OP is expressing is the guys that can mine for $5000. because thats the floor (bottomline cheapest/most efficient).

2. the guys at $7500 wont sell (unless stupid) for less than $7500. so if the price dropped to $6k the $7.5k guys would just hodl

3. however if the price was say $6k then the guys with the most efficient asics and the most cheapeat electric (the floor) can still sell at a profit. so they will..
this means the price can still go below $6k.

4. but when the price gets down to say $5k (the floor) literally all miners are not making profit. and so all miners are hodling and so the price begins to plateau at $5k and refuse to go lower.

5. as for the 'market' participants of the last 10 years. some have/did buy below $5k. and so able to profit below $5k. but the thing is. while the price for the last year has been $20k-$3.5k-$5k-$8k if thy have not sold yet, thus they dont want to sell for less than X thus making the price floor a 'bottomline support'

6. majority of ASIC farms do not react to the price. they preplan their hashrate months/a year in advance. they have special contracts with electric companies for best electric cost deals. they have special deals with ASIC manufactures to buy/reserve XXXXXX amount of asics of the next newest batch. they dont simply see a price rise and magically get delivered thousands of extra rigs within half an hour to respond to temporary speculative FOMO price rises.

7. you will notice
when the first major asics hit the market late summer 2013 the price moved up as a response to mining
when asic farmers sold off their old S9's dirt cheap in october 2018 and started using more efficient asics but less of them to cause the october hashrate drop.. in november the price dropped as a response to the floor drop
now the hashrate is rising. the cost floor is rising people are less inclined to sell for less and as such the price is rising

you will be surprised how in the mining/market dynamics. mining influences the market more than the market influences mining.

tl:dr; there gets to be a bottom floor where the general community all reach thier points they refuse to sell below. and eventually a plateau is reached where no one can profit when they sell. this is the OP's 'floor'

8. the OP is showing a chart of the difference between the price floor of the cheapest way to get coins right now, vs the current market price. thus this can be used for people to view how much of a gap there is between the bottomline value of bitcoin and the speculative FOMO price of the markets.

for instance if a miner could create bitcoin for $2k last year. but the market was $20k. thats $18k of speculation/hype FOMO/bubble, which is an obvious indicator that a large correction is impending.

however
in august 2018 if the miner could create bitcoin for $5.8k and the price was $6k then there is not much speculation occuring
in october 2018 if the miner could create bitcoin for $4k and the price was $6k then there is speculation occuring and expect a correction to be impending
in november 2018 if the miner could create bitcoin for $3.5k and price was $3.6k then there is not much speculation occuring

[cocoadreamboy]

to get to some peoples points as it seems this topic is about some principles that go back as far as hal finney and his understanding of the economy. and something i mentioned in other topics

1. it does not matter if 10 people can mine for $7500 and 10 people can mine for $5000. the price for the OP is expressing is the guys that can mine for $5000. because thats the floor (bottomline cheapest/most efficient).

2. the guys at $7500 wont sell (unless stupid) for less than $7500. so if the price dropped to $6k the $7.5k guys would just hodl

3. however if the price was say $6k then the guys with the most efficient asics and the most cheapeat electric (the floor) can still sell at a profit. so they will..
this means the price can still go below $6k.

4. but when the price gets down to say $5k (the floor) literally all miners are not making profit. and so all miners are hodling and so the price begins to plateau at $5k and refuse to go lower.

5. as for the 'market' participants of the last 10 years. some have/did buy below $5k. and so able to profit below $5k. but the thing is. while the price for the last year has been $20k-$3.5k-$5k-$8k if thy have not sold yet, thus they dont want to sell for less than X thus making the price floor a 'bottomline support'

6. majority of ASIC farms do not react to the price. they preplan their hashrate months/a year in advance. they have special contracts with electric companies for best electric cost deals. they have special deals with ASIC manufactures to buy/reserve XXXXXX amount of asics of the next newest batch. they dont simply see a price rise and magically get delivered thousands of extra rigs within half an hour to respond to temporary speculative FOMO price rises.

7. you will notice
when the first major asics hit the market late summer 2013 the price moved up as a response to mining
when asic farmers sold off their old S9's dirt cheap in october 2018 and started using more efficient asics but less of them to cause the october hashrate drop.. in november the price dropped as a response to the floor drop
now the hashrate is rising. the cost floor is rising people are less inclined to sell for less and as such the price is rising

you will be surprised how in the mining/market dynamics. mining influences the market more than the market influences mining.

tl:dr; there gets to be a bottom floor where the general community all reach thier points they refuse to sell below. and eventually a plateau is reached where no one can profit when they sell. this is the OP's 'floor'

8. the OP is showing a chart of the difference between the price floor of the cheapest way to get coins right now, vs the current market price. thus this can be used for people to view how much of a gap there is between the bottomline value of bitcoin and the speculative FOMO price of the markets.

for instance if a miner could create bitcoin for $2k last year. but the market was $20k. thats $18k of speculation/hype FOMO/bubble, which is an obvious indicator that a large correction is impending.

however
in august 2018 if the miner could create bitcoin for $5.8k and the price was $6k then there is not much speculation occuring
in october 2018 if the miner could create bitcoin for $4k and the price was $6k then there is speculation occuring and expect a correction to be impending
in november 2018 if the miner could create bitcoin for $3.5k and price was $3.6k then there is not much speculation occuring

Correct as usual Franky Much love and respect

[Artemis3]

OP, I think this post best fits to be in the   Mining thread since the topic is focused in mining.

I believe that maybe some of the whales might have some mining farm, but some might be just pure early bitcoin investors who had invested a lot of money in bitcoin since it started, where bitcoin costs less than a dollar.

To me this is looking more like a post better suited to the Service Announcements section. A signals service perhaps? It seems more suited somewhere under the Marketplace section than under Mining, unless it was free and then it could go into Mining speculation.

The subscription to get this type daily analysis, is about 10 USD per month:

May 23
Daily Summary:

It is not advisable to buy crypto right now. The loss numbers are high and more efficient ASICs are coming out for BTC and BCH. That will lower the cost of mining and provide the new high efficiency miners access to VERY cheap bitcoin. Please look at Nov 2018 on the 2 year chart in Fundamental Method page

Bitcoin Possible Loss - 41.4% - Optimal time to buy BTC was May 2. Now is a good time to sell. I suggest devaluing until the new ASICs are active.

Bitcoin Cash Possible Loss - 51.3% - Optimal time to buy BCH was May 1. Now is a good time to sell.  I suggest devaluing until the new ASICs are active.

Ethereum Possible Loss - 39.8% - Optimal time to  buy ETH  was April 29. Now is the optimal time to sell. Because the recent price increase was due to the boom in BTC, I suggest being very careful with any ETH holdings. It could find support with its on mining network, or BTC could bash it down. Nevertheless, ETH is safer than both BTC and BCH right now.

[cocoadreamboy]

To me this is looking more like a post better suited to the Service Announcements section. A signals service perhaps? It seems more suited somewhere under the Marketplace section than under Mining, unless it was free and then it could go into Mining speculation.

The subscription to get this type daily analysis, is about 10 USD per month:

Thank you for the advice, I will repost there soon

[Reid]

$3.5 million a day? Are you really sure about that?
Ain't your government will question you about that? That is like 3,500 houses if they got $1,000 bill a day. But that is still high for a day only. That is a bill for a month in just one household.
Even malls dont have that large amount in electricity to pay with all the air conditioning they are using.

Maybe the electric company will be forced to limit you for using a lot of electricity already.  

Credits to franky1 for the effort explaining the mining profits, methods, etc... 

[odolvlobo]

If I could make a magical ASIC that could seize 100% market share of the hash power of the network for $100 and get free electricity. I could create bitcoins for near zero cost, and I could dump 1800 bitcoins per day on the markets for PURE profit until the price of bitcoin goes to near zero.

Miners are already dumping 1800 BTC on the market every day. Nothing changes if you do it instead of other people.

to get to some peoples points as it seems this topic is about some principles that go back as far as hal finney and his understanding of the economy. and something i mentioned in other topics

1. it does not matter if 10 people can mine for $7500 and 10 people can mine for $5000. the price for the OP is expressing is the guys that can mine for $5000. because thats the floor (bottomline cheapest/most efficient).

2. the guys at $7500 wont sell (unless stupid) for less than $7500. so if the price dropped to $6k the $7.5k guys would just hodl

3. however if the price was say $6k then the guys with the most efficient asics and the most cheapeat electric (the floor) can still sell at a profit. so they will..
this means the price can still go below $6k.

4. but when the price gets down to say $5k (the floor) literally all miners are not making profit. and so all miners are hodling and so the price begins to plateau at $5k and refuse to go lower.
...

Of course, some people choose to sell only at a profit (despite it being a poor strategy), but there is no reason believe that all or even most miners behave that way. Do you have any information that documents this kind of behavior?

you will be surprised how in the mining/market dynamics. mining influences the market more than the market influences mining.

I would be surprised. 1800 BTC are mined each day. That's only 1.2% of the 150k BTC traded each day (which assumes that 95% of the reported volume is fake). Could you point me to information that supports your claim?