What will you do when the gold rush ends?

[Miner612]

And blocks become 25 coins per, instead of 50.

What do you think will happen?  Will you stop mining?  Do you think the value will go up?  I am curious what you guys think.

Discuss.

[late443]

just a guess here but when you limit supply demand goes up so in theory once the count
goes down to 25 price should increase possibly up to 2x the current amount.
then again the market can be a strange thing.

[Miner612]

I hope you are right.  I have a feeling something along those lines will happen as well... but i what do i know lol

[notme]

just a guess here but when you limit supply demand goes up so in theory once the count
goes down to 25 price should increase possibly up to 2x the current amount.
then again the market can be a strange thing.

Except it is well known, so the market will price it in well before it actually happens.  You won't see a "halving day" gap up.

[Miner612]

I do think a shit ton of miners will stop mining and sell all their stuff on eBay.

[koin]

I do think a shit ton of miners will stop mining and sell all their stuff on eBay.

it all depends on the price and when.  if we end up with a $10 exchange rate, that would support the exact same amount of mining at 25 btc as we have today trading at $5 with 50 btc  -- all assuming the difficulty remains at this level. 

the wildcard is fpgas.  they could make the difficulty rate go up without the price going up.

[Matthew N. Wright]

The law of supply and demand.

When the amount of coins halves the price will _____.

Fill in the blank.

[koin]

The law of supply and demand.

When the amount of coins halves the price will _____.

the upcoming drop in the daily mining production is already something well known and speculators are probably pricing that in already.

what isn't known is how many more people will be using bitcoin for payments a year from now.  that will have a much much bigger impact on the demand for bitcoins at some point than the what the amount produced by mining has.

[btctrader22]

I do think a shit ton of miners will stop mining and sell all their stuff on eBay.

But the price ?

[Jaryu]

I do think a shit ton of miners will stop mining and sell all their stuff on eBay.

But the price ?

at first it will be over priced like ebay usually is, then after a few months of holding stuff they don't want to anymore they will start selling it for more reasonable prices.

[btctrader22]

I do think a shit ton of miners will stop mining and sell all their stuff on eBay.

But the price ?

at first it will be over priced like ebay usually is, then after a few months of holding stuff they don't want to anymore they will start selling it for more reasonable prices.

no i mean the price of bitcoin

[kliffen]

If my economy classes taught me well, you're likely to see a rapid increase in BTC prices just before the block payout decrease. When supply goes down, demand will increase. Both speculators and hoarders are likely to buy large quantities

[wyager]

It's a little more complex than that.

First off, there will not suddenly be half as many Bitcoins available. There will simply be fewer bitcoins being made. If demand for Bitcoins continues to increase at the same rate as it does now (that is, the Bitcoin market keeps growing), but production is slowing down, then we will see an increase in the value of Bitcoins.

This is called deflation; the total value of trade with Bitcoins increases faster than the number of Bitcoins, and the value of a Bitcoin goes up.

So, assuming Bitcoin continues to grow, that 25BTC will eventually be worth more Dollars/Euros/Labor than it is now, which will increase the incentive to keep mining.


If I'm thinking straight, the value of a bitcoin is basically based off of this equation:

Value=Trade Value/Units of Currency (or, using variables I just made up, V=T/U)

So, if U increases slowly (low ∆U, e.g. the BTC created per block is only 25 instead of 50) and T increases quickly (high ∆T), then V will go up. The thing is, both T and U are already rather large, so any changes in ∆T or ∆U will take a while to have a significant effect on V.


This is made much more complex by speculation and other factors, but this is the basic idea.

[drsteve]

The market should have already priced in all future increases in difficulty and decreases in rewards.

[frograven]

I'm very curious to see what will happen when it goes to 25BTC per block.. be interesting to see if the FPGA miners become more or less viable.

Are there any web pages / graphs / etc that offer a "countdown" to this moment?

[kelsey]

bitcoin survives by people using it, when the rewards are halved for mining, many miners will lose interest.

instead of thinking of hoarding and profiteering start more using and promoting, and finding ways to decrease the barriers to entry.

[Voxfaith]

As the current economy - the coins which already do exist - aren't affected, people will get their demand satisfied by all the suppliers which already have coins at first.
If the Bitcoin user-base increases suppliers will most likely adapt to the increased demand thus the value will slowly raise.
But as it is with my guess a rather slow process, with no change at first, many miners will be put off for having their profits essentially halved. Which then in turn makes it more profitable for remaining miners again - as difficulty drops.

[notme]

Note that the equation of exchange is an over simplified mathematical model of the real world.

+1

[JennyHill]

The gold rush won’t end when the reward halves because mining was never intended to be a gold rush in the first place. It’s simply an incentive system to secure the network, not a get rich quick scheme.

[koin]

mining was never intended to be a gold rush in the first place.

you weren't around last april or may, were you?  new rigs were paying for themselves in like six to eight weeks, including the electricity costs: http://blockchain.info/charts/miners-operating-profit-margin