We're 30,300 blocks from the reward drop!

[DeathAndTaxes]

Well I never said it would rise however price of Bitcoin is based on supply and the reduced block reward means less supply coming on the market.

Say tomorrow gold production globally fell 50% what do you think would happen to the price of gold?

[BCMan]

Well I never said it would rise however price of Bitcoin is based on supply and the reduced block reward means less supply coming on the market.

Say tomorrow gold production globally fell 50% what do you think would happen to the price of gold?

Still, theres plenty of coins to cover current market needs. And its not a fact that demand will rise in the future.

[DeathAndTaxes]

Well I never said it would rise however price of Bitcoin is based on supply and the reduced block reward means less supply coming on the market.

Say tomorrow gold production globally fell 50% what do you think would happen to the price of gold?

Still, theres plenty of coins to cover current market needs. And its not a fact that demand will rise in the future.

Well demand is always unknown.  Block reward could double and demand could triple and prices would still rise.

Regardless lower supply is always bullish.  Yes if demand falls faster than supply then prices can fall but they would have fallen even MORE had supply remained static.  Thinking another way lets pretend Satoshi had made the block reward 25 instead of 50 for first 210,000 blocks.  Do you imagine the price of BTC today would be the same, lower, or higher?  Another way to look at it is if 1.3 million bitcoins were erased due to a software error would that cause prices to rise, fall or remain the same?

[Cosbycoin]

Well I never said it would rise however price of Bitcoin is based on supply and the reduced block reward means less supply coming on the market.

Say tomorrow gold production globally fell 50% what do you think would happen to the price of gold?

Still, theres plenty of coins to cover current market needs. And its not a fact that demand will rise in the future.

Yes you are right, if all 8+ million were on the exchange to be bought. Only like 350k btc is on mtgox.

Your point?

[foggyb]

Thinking another way lets pretend Satoshi had made the block reward 25 instead of 50 for first 210,000 blocks.  Do you imagine the price of BTC today would be the same, lower, or higher?  

Interesting question. I'm tempted to say it could be the same, because if the price is purely driven by the market psychology. However, since bitcoins are not infinitely divisible, there is only half as much bitcoin with 25 block reward. That is not psychological, that is purely a supply problem. So I speculate the price must move higher.

[Rassah]

I fully expect miners to drop out as soon as the halving block happens, since at that point revenue gets cut by half, and mining will no longer be profitable for many. So, until the next difficulty change, blocks, and thus transactions, will take a long time, mined by only the few still left doing it. So, I wonder if the huge drop in supply will be offset by a huge increase in inconvenience and uncertainty? Or will the uncertainty and expectation of a price increase drive up Bitcoin prices a week or so beforehand, to the point where mining will still remain just barely profitable, thus avoiding the issue?

[siggy]

I fully expect miners to drop out as soon as the halving block happens, since at that point revenue gets cut by half, and mining will no longer be profitable for many. So, until the next difficulty change, blocks, and thus transactions, will take a long time, mined by only the few still left doing it. So, I wonder if the huge drop in supply will be offset by a huge increase in inconvenience and uncertainty? Or will the uncertainty and expectation of a price increase drive up Bitcoin prices a week or so beforehand, to the point where mining will still remain just barely profitable, thus avoiding the issue?

I'm expecting network hashrate to start dropping 2-3 weeks before the halving.  Marginal GPU miners will want to balance "mining to the bitter end", with, "beating the rush to sell GPU's on ebay"  After the halving, you will see an instant drop to 60-70% of pre-halving hashrate as the rest of the marginal miners do the math and figure out they aren't paying the electric bills anymore. 

Give it a month or 2 for difficulty to come in line with the new hash-availabily reality, and the end result will be that mining income per Ghash will be worth about 80% of what it was before. (I'm guessing around $2 per day per Ghash) 

If any, the halving will only cause a very small increase in the price of BTC.

This assumes we aren't in the middle of a bubble come halving-day.  If thats the case, yer gonna have to start looking at tea leaves and chicken entrails to get a feel for where we're headed.

Sigg

[notme]

This assumes we aren't in the middle of a bubble come halving-day.  If thats the case, yer gonna have to start looking at tea leaves and chicken entrails to get a feel for where we're headed.

Sigg

I'll stick to my wish bones.

[DeathAndTaxes]

Siggy your 60% to 70%+ numbers means you think 70%+ or more of miners have an electrical cost >50% of their revenue?

God I hope your right.  With GPU my operating cost is <$1.30 per BTC and should be <$1.00 per BTC pretty soon.  I wouldn't be mining right now if it costs me >$2.50 per BTC.

[siggy]

Siggy your 60% to 70%+ numbers means you think 70%+ or more of miners have an electrical cost >50% of their revenue?

God I hope your right.  With GPU my operating cost is <$1.30 per BTC and should be <$1.00 per BTC pretty soon.  I wouldn't be mining right now if it costs me >$2.50 per BTC.

to clarify, I think 60-70% have an electrical cost <50% of their current revenue.  If network hashrate is 10 Thash before halving, I expect it to be 6-7 Thash after halving.

Sigg

[stevegee58]

Something that occurred to me was regarding these specialized FPGA boards like the one from Butterfly Labs.  You pay around $600 for a highly specialized device that generates around 800 MHash/sec.  That's fine, except you can set up an equivalent performing GPU rig for about the same money (or less).

As others have pointed out, a GPU could be resold into the gaming market to at least recoup some of the investment.  Who'd want to buy a used BFL box?
Add to the mix the fact that in less than a year the rewards of mining will be cut in half.

It's like what happened to the price of generators after Y2K.

[DeathAndTaxes]

to clarify, I think 60-70% have an electrical cost <50% of their current revenue.  If network hashrate is 10 Thash before halving, I expect it to be 6-7 Thash after halving.

Sigg

DOH.  I read drop "to" as drop "of".

[siggy]

$1/BTC that is very low with GPUs. My 2GH box produces 1.25 BTC/day, it costs 850W/1000*24=20.4 kWh*0.069=$1.41/day to run.

But if I add the delivery/transmission/account admin/other costs that my utility co. adds to the bill, it is more like $0.10/kWh so the cost goes to $2.04/day.

So my marginal mining rate (or MMR) is $1.63/BTC

Got to add icarus boards to my setup :-(

Umm.. unless you are mining at a dedicated mining facility, you shouldn't add in the delivery/trans/admin/other costs if they are fixed*.  If you are mining at home, you'd be paying those anyway.  Marginal cost would only be 0.069/kWh.

* If they are not fixed, but variable charges based on kWh usage, then ignore the above. You do, however, need to go down to your electric co and slap around someone for making your bill more confusing

Sigg

[foggyb]

I'm expecting network hashrate to start dropping 2-3 weeks before the halving.  Marginal GPU miners will want to balance "mining to the bitter end", with, "beating the rush to sell GPU's on ebay"  After the halving, you will see an instant drop to 60-70% of pre-halving hashrate as the rest of the marginal miners do the math and figure out they aren't paying the electric bills anymore. 

Sigg

The other interesting question is: where will total hashrate be in 7 months? This chart shows about a 30% increase in mining in three months beginning in December 2011. If price remains stable, (it may rise in anticipation of the block reward halving) the global hashrate could double between now and December if bitcoin keeps making headlines. I think the market will have these events priced in before they arrive.

[malevolent]

price of Bitcoin is based on speculation

FTFY

[Rassah]

I'm expecting network hashrate to start dropping 2-3 weeks before the halving.  Marginal GPU miners will want to balance "mining to the bitter end", with, "beating the rush to sell GPU's on ebay"

We could also see the hashrate ramping up during the last few weeks, as anyone who has any type of mining hardware tries to squeeze out every last bitcoin they can before the reward drops. This could really go in any direction 

[tonto]

I am starting to wonder whether GPU miners will keep going at it or not.

I will mine as long as I am breaking even or better. The exchange rate where I'm not breaking even is silly low. It gets even lower in the winter. 

I will keep mining regardless.  I mined SETI@home and folding@home for "free" before I discovered bitcoins.  Even if I made a penny profit per month, I'd keep mining.

[Syke]

Yes you are right, if all 8+ million were on the exchange to be bought. Only like 350k btc is on mtgox.

Your point?

My coins aren't on technically on MtGox, but believe me they will end up there real fast if the price is right. So while you only see 350k on MtGox at this moment, a whole lot more are just waiting for the right price.

[Bitcoin Oz]

I think the price will reflect the reward cut as we have seen with the recent rise to +$8

Im waiting for after the block cut to get a new gaming pc

[notme]

I think the price will reflect the reward cut as we have seen with the recent rise to +$8

Im waiting for after the block cut to get a new gaming pc

I wouldn't be surprised to see quite a bit of selling pressure immediately after the block cut due to this very line of reasoning.

Also... 20806 blocks to go!