Bitcoin price vs. hash rate?

[BuildTheFuture]

Such hashrate lately

Based on how many ASIC producers there are now, and how much some of them are starting to pump out this summer, I think we're on track for the 1 exahash region by the end of the year, or about 100x more than where we were Jan 1st 2014. Let's just say I'd be highly surprised if price has not followed and taken out the $1k level by year-end. Hashrate would be supportive of a 5 digit USD price sometime next year.

[1713518807]

1713518807

[ajareselde]

Hi all,
Given the recent flurry of posts on how bitcoin's value will keep on dropping, how does one think about the ever-increasing bitcoin hash rate?
http://blockchain.info/charts/hash-rate
http://blockchain.info/charts/hash-rate?timespan=60days&showDataPoints=true&daysAverageString=1&show_header=true&scale=0&address=

Looks like miners, the core backers and long-term investors in bitcoin, still have plenty of optimism left? And the current market is just speculators' short-term panic?

-ElOmmy

no matter the hashrate and diff, new coins minted per day remain the same in general.
people often think that supply is shorted with the rise of difficulty, but actualy its the same, just more spread out between miners.
more interesting thing to talk about is next halving, if that doesnt move the price way up, nothing will.

[AZwarel]

This "mining causes price" is a basic fallacy.

Read https://en.bitcoin.it/wiki/Myths#Bitcoin_is_backed_by_processing_power

"The value of bitcoins are based on how much electricity and computing power it takes to mine them"

"- This statement is an attempt to apply to Bitcoin the labor theory of value, which is generally accepted as false. Just because something takes X resources to create does not mean that the resulting product will be worth X. It can be worth more, or less, depending on the utility thereof to its users.

In fact the causality is the reverse of that (this applies to the labor theory of value in general). The cost to mine bitcoins is based on how much they are worth. If bitcoins go up in value, more people will mine (because mining is profitable), thus difficulty will go up, thus the cost of mining will go up. The inverse happens if bitcoins go down in value. These effects balance out to cause mining to always cost an amount proportional to the value of bitcoins it produces. "

Also, check out the facts:
Transaction fees for miners are diminishing hard! https://blockchain.info/charts/transaction-fees?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Hashrate is ever increasing in the long run, and has no correlation of the market price (it can't be, a user don't care about how hard was it to make, labor not = value!!)
https://blockchain.info/charts/hash-rate?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Market price (aka capitalization)
https://blockchain.info/charts/market-cap?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

So, no, IF you are not hodling your mined BTC, than mining is purely loosing money at today prices. If you bought the mining machine in BTC, than it will always be in the negative, because that way the price of BTC does not matter (you either hold BTC, or a machine making BTC, costing the same BTC = BTC/USD price is irrelevant.) The only way you make profit if you mined more BTC, than the cost of your machine IN BTC !!!
Obviously, that cannot happen, because it means the difficulty is lower, means more miners join, means less BTC return etc. It is a self reinforcing spiral!

The only time ASIC mining was profitable was when the first baches came out, and even that only mostly for the manufacturers themselves! (Or cloud hashing, which never going to make the money back for the renters...http://arielbarreiro.com.ar/en/bitcoin-cloud-hashing-review)

[Undone]

no matter the hashrate and diff, new coins minted per day remain the same in general.
people often think that supply is shorted with the rise of difficulty, but actualy its the same, just more spread out between miners.
more interesting thing to talk about is next halving, if that doesnt move the price way up, nothing will.

It seems that there's no use in even trying to explain this to people on this forum.

Not to mention all of the "price will follow hashrate" comments. But please, yes - all of you should go buy more coins right now because the hashrate is continually rising.

[AZwarel]

no matter the hashrate and diff, new coins minted per day remain the same in general.
people often think that supply is shorted with the rise of difficulty, but actualy its the same, just more spread out between miners.
more interesting thing to talk about is next halving, if that doesnt move the price way up, nothing will.

It seems that there's no use in even trying to explain this to people on this forum.

Not to mention all of the "price will follow hashrate" comments. But please, yes - all of you should go buy more coins right now because the hashrate is continually rising.

I have tried to explain the same thing. From a market (price) point of view it does not matter if 100 Ghash/sec produces that 25 BTC/block or 100 Phash/s does it. They are the same 25 BTCs,
so, no, more hashrate does not mean higher price.
It is the opposite, if price goes up, more miner turns on their machinery!

[kuzetsa]

I made an updated chart today (not the best I've ever done, but I tried) because it didn't look like anyone had put one up showing data from the time after GOX shut down... Also, the timescale doesn't go back as far because pre-2012 data was almost worthless I think, as volume and market cap was pretty low still, as bitcoin hadn't been adopted very much.


Edited to add:

I think it's interesting that there was a price bubble (as well as a difficulty surge) right after the first ASICs were coming onto the market, and then another bubble right around the time the second wave of more energy efficient, faster ASICs started to pour out.

[right wing authoritarian]

no matter the hashrate and diff, new coins minted per day remain the same in general.
people often think that supply is shorted with the rise of difficulty, but actualy its the same, just more spread out between miners.
more interesting thing to talk about is next halving, if that doesnt move the price way up, nothing will.

It seems that there's no use in even trying to explain this to people on this forum.

Not to mention all of the "price will follow hashrate" comments. But please, yes - all of you should go buy more coins right now because the hashrate is continually rising.

I have tried to explain the same thing. From a market (price) point of view it does not matter if 100 Ghash/sec produces that 25 BTC/block or 100 Phash/s does it. They are the same 25 BTCs,
so, no, more hashrate does not mean higher price.
It is the opposite, if price goes up, more miner turns on their machinery!

While the above is all true, it does not take into account that the market for mining gear is a significant one for the use of bit coins. So to the extent that that market is influenced by the hash rate so to will the bitcoin price. Most people understand that the bitcoin supply is not affected by the hash rate.

[Undone]

While the above is all true, it does not take into account that the market for mining gear is a significant one for the use of bit coins. So to the extent that that market is influenced by the hash rate so to will the bitcoin price.

Spend some more time around here, and you'll slowly start to realize that this just isn't true.

It's almost completely parallel to the old gold rush adage that it's better to sell the shovels than to mine the gold. That's essentially what you described above. But it has practically zero effect on market price.

The topic of coins "hoarded" by miners indefinitely...sure, that does play an indirect role on the market price. But the whole "price vs. hash rate" discussions here are typically way off the mark.

[Bogleg]

no matter the hashrate and diff, new coins minted per day remain the same in general.
people often think that supply is shorted with the rise of difficulty, but actualy its the same, just more spread out between miners.
more interesting thing to talk about is next halving, if that doesnt move the price way up, nothing will.

It seems that there's no use in even trying to explain this to people on this forum.

Not to mention all of the "price will follow hashrate" comments. But please, yes - all of you should go buy more coins right now because the hashrate is continually rising.

I have tried to explain the same thing. From a market (price) point of view it does not matter if 100 Ghash/sec produces that 25 BTC/block or 100 Phash/s does it. They are the same 25 BTCs,
so, no, more hashrate does not mean higher price.
It is the opposite, if price goes up, more miner turns on their machinery!

While the above is all true, it does not take into account that the market for mining gear is a significant one for the use of bit coins. So to the extent that that market is influenced by the hash rate so to will the bitcoin price. Most people understand that the bitcoin supply is not affected by the hash rate.

Cost of mining equipment has been keep going down for while. It seems we have finally hit a technology cap in term of hash/cost and hash/watt.

How events will be played out in the coming months will be interesting to watch for by stander.

[right wing authoritarian]

What will also be interesting will be to see what happens transaction fees become significant relative to mining rewards. The technology cap is interesting cause I wonder where that  is? Is it at 28nm or 22 or 16?

[Swordsoffreedom]

Price and hash rate are related but sometimes, for example after a bubble peak, they can diverge.

As in the hash rate goes higher and the price goes down?

In a sense yes there is a correlation the hash rate hasn't dropped though in a long time but it would probally slow down significantly in terms of growth
Depends on what gen your on as well but the hashrate has gone up 650 X since last year according to the coindesk report
http://www.coindesk.com/state-of-bitcoin-q2-2014-report-expanding-bitcoin-economy/

[dwgscale11]

Interesting read, is there a price vs hashrate updated chart?

[bit1]

Interesting read, is there a price vs hashrate updated chart?

Probably yes, You revived an old thread but surely someone will have a link updated or maybe you could try blockchain.info  --->charts.  

[Shenzou]

Well as bitcoin becomes more and more harder to mine means we need more has power for it which means the price of the bitcoin will go up even more, currently people joining pools and trying to mine bitcoin is not that profitable so i say if the hash rate is small the bitcoin price goes up

[Ajan08]

One question is on my mind. If there has to be a price increase, should not be also come hashrate increase?

In depth: btc supply can be divided between existing bitcoins [where the supply (just for simplification) is very unelastic, because of hodling etc.] and freshly minted bitcoins [where the supply is very elastic, because miners are selling everything they mine for current price (again for simplification)].

So with those assumptions, where the price is defined by near zero profit of miners, the price should be rising max at the pace of hashrate surge. But the trick is the max. It would happen only in a world without technological innovation. If miners get more effective tools, then the price will surge less than hashrate.

So if those thoughts are correct, I think much more hashrate has to be added to allow btc price to grow. For example from halving we see only 25% rise of hashrate, but much of it if not all is swallowed by the technological advance.

So does bitcoin need surge in demand that will cause temporary high price that will be very attractive for miners and that will then cause the high hashrate and new equilibrium will come?

[websoftwareengineer]

In my opinion, Bitcoin mining is one of the easiest way to earn coins but that will only be depending on the country you were living because some of the country has high electricity consumption. China is one of the country that has a less electricity bills that is why they are one of the highest contributor in the market.

[malikusama]

Hi all,
Given the recent flurry of posts on how bitcoin's value will keep on dropping, how does one think about the ever-increasing bitcoin hash rate?
http://blockchain.info/charts/hash-rate
http://blockchain.info/charts/hash-rate?timespan=60days&showDataPoints=true&daysAverageString=1&show_header=true&scale=0&address=

Looks like miners, the core backers and long-term investors in bitcoin, still have plenty of optimism left? And the current market is just speculators' short-term panic?

-ElOmmy

Now today the hash rate is much higher than ever in the past, the miners are doing there job pretty well and the network have become more stable. The confirmation time of transactions have reduced a lot in the last couple of years.
I will say don't worry about the hast rate at all because due to growing users/community of bitcoin more miners are in the field now, so hash rate will never going to decrease any more.