Gold collapsing. Bitcoin UP.

[Odalv]

Trolls are getting overconfident 

Am I a troll because I dare speak to the all powerful wealthy elite?

Who's saying you can't speak?

Its what you say that matters.

Maybe there should have been more people like Gavin Andresen warning people about the risks of buying a remarkable new tool at nevertheless outrageously inflated prices?

This is precisely why you're going to have a bad time in this thread;  that suggestion is idiotic.

How is Gavin, of all people supposed to know what is an outrageous price?  And how's it his responsibility? You made the choice to invest at 550. That's your problem.

btw: 550 is not so bad price. I've bought a few at this price. Only 1 (of few millions) will be buying at the bottom. Others will buy much higher.

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[Peter R]

Although this is old hat for many here, I put together a little explanation that may help people see how mining profitability affects the bitcoin price.
...

Thanks for that review. 

There's also the fact that when the hash rate is rapidly increasing, the daily inflation rate is much higher than the 3600 BTC/day target.  For example, the daily inflation rate is 5143 BTC and 4500 BTC at 7 min and 8 min blocktimes, respectively.  If market participants in aggregate choose to purchase rather than invest in new mining hardware, the new supply of coins will drop significantly.  Compared to the 4500 BTC/day case, at a stable hash rate there'd be 900 less bitcoins produced each day.  At $400/BTC, this represents a $360,000/day reduction in supply, which would tend to apply upwards pressure on the price (all other variables being equal).   

[Melbustus]

Trolls are getting overconfident 

Am I a troll because I dare speak to the all powerful wealthy elite?

Who's saying you can't speak?

Its what you say that matters.

... outrageously inflated prices?

Show me a model.

Most models show bitcoin's success-case necessitating a price several orders of magnitude higher than today's. Obviously it comes down to what probability you assign to the success-case materializing, but even the relatively minor success-cases require 1BTC > $10,000.

The price could've shot to $5000 last year and it would still be false to have called it "outrageously inflated" (assuming you can't show me a model that makes sense to that effect).

(To be fair, I don't day-trade, so I'm not going to pay much attention to arguments based on technicals, as those are mostly irrelevant for those who think long-term (which is probably most of us in this thread))

[marcus_of_augustus]

Honeybadger is bleeding to death. What's next guys?

we hit the cost of production floor, maybe undershoot by5-10%, coins become cheaper to buy than mine, some hashrate goes offline ... then the next super cycle can begin again.

That's what next you blind old fool

[BlindMayorBitcorn]

Ok then. *hides face in shame*

[cypherdoc]

Think about how much money was invested, both by consumers and manufacturers, into pushing the difficulty up several orders of magnitude over the past year. That's all money that could have and arguably would have been invested into driving the BTC price up. A lot of the fresh fiat has been going into the mining industry instead of the price. This is of course self-limiting, and so with all that investment happening behind the scenes, when the curtain is pulled back (when buying mining equipment becomes unprofitable), without any outside reason for the investment to slow down, it should start funneling back into the price.

yes, this is a variation of my bucket theory in which different components of the Bitcoin economny take on water at different rates and different times to different levels.  the main point being that the water levels of all buckets are rising in aggregate.

[Odalv]

Think about how much money was invested, both by consumers and manufacturers, into pushing the difficulty up several orders of magnitude over the past year. ...

I did just done the calculation. If trend will hold then it is one order of magnitude every 8 months.

Edit:
Cost of production of 1 bitcoin can be $1,000 before half of 2015.( @10 cents / kWh )

[smoothie]

Trolls are getting overconfident 

Am I a troll because I dare speak to the all powerful wealthy elite?

Who's saying you can't speak?

Its what you say that matters.

Maybe there should have been more people like Gavin Andresen warning people about the risks of buying a remarkable new tool at nevertheless outrageously inflated prices?

You can't blame anyone but yourself for buying Bitcoin at a certain price. Had the price gone up you would have a different tune.

Stop blaming others for your inadequacies. Thanks! 

[Zangelbert Bingledack]

Think about how much money was invested, both by consumers and manufacturers, into pushing the difficulty up several orders of magnitude over the past year. That's all money that could have and arguably would have been invested into driving the BTC price up. A lot of the fresh fiat has been going into the mining industry instead of the price. This is of course self-limiting, and so with all that investment happening behind the scenes, when the curtain is pulled back (when buying mining equipment becomes unprofitable), without any outside reason for the investment to slow down, it should start funneling back into the price.

yes, this is a variation of my bucket theory in which different components of the Bitcoin economny take on water at different rates and different times to different levels.  the main point being that the water levels of all buckets are rising in aggregate.

So it's like the hose is the exponentially growing stream of new money coming into the Bitcoin investment space, and it just goes into different buckets, one of which is actual price growth. That means as long as either price or mining (or perhaps VC money into startups?) continue upward then nothing is amiss.

[sgbett]

Trolls are getting overconfident 

Am I a troll because I dare speak to the all powerful wealthy elite?

Who's saying you can't speak?

Its what you say that matters.

Maybe there should have been more people like Gavin Andresen warning people about the risks of buying a remarkable new tool at nevertheless outrageously inflated prices?

You can't blame anyone but yourself for buying Bitcoin at a certain price. Had the price gone up you would have a different tune.

Stop blaming others for your inadequacies. Thanks! 

Lol at my inadequacies. I'm already hiding my face in shame guys. Lay off

Tough crowd huh

[cypherdoc]

Think about how much money was invested, both by consumers and manufacturers, into pushing the difficulty up several orders of magnitude over the past year. That's all money that could have and arguably would have been invested into driving the BTC price up. A lot of the fresh fiat has been going into the mining industry instead of the price. This is of course self-limiting, and so with all that investment happening behind the scenes, when the curtain is pulled back (when buying mining equipment becomes unprofitable), without any outside reason for the investment to slow down, it should start funneling back into the price.

yes, this is a variation of my bucket theory in which different components of the Bitcoin economny take on water at different rates and different times to different levels.  the main point being that the water levels of all buckets are rising in aggregate.

So it's like the hose is the exponentially growing stream of new money coming into the Bitcoin investment space, and it just goes into different buckets, one of which is actual price growth. That means as long as either price or mining (or perhaps VC money into startups?) continue upward then nothing is amiss.

yeah, my personal buckets are price, consumer adoption, merchants, exchanges, mining, +/- ATM's.  for a while now we've been seeing increases in basically everything except the price, which is the most speculative bucket of them all that varies most with sentiment and cyclical variation.  we're in a bear cycle which will eventually bottom out.  it's a good time to buy and then hold at least to 2020.

of course, all this is predicated on a belief in the fundamentals of Bitcoin and its real world relationship to finance and the economy, which is what we discuss in this thread ad nauseum.  if you think its all been one massive pump and dump from mass illusion then you sell or short.  but by my estimation, nothing has changed.  you have to be very suspicious that we've had numerous ramps since 2009 that have been recoveries from huge crashes.  ponzi's don't bounce.  something is going on here.

[cypherdoc]

Trolls are getting overconfident  

Am I a troll because I dare speak to the all powerful wealthy elite?

Who's saying you can't speak?

Its what you say that matters.

Maybe there should have been more people like Gavin Andresen warning people about the risks of buying a remarkable new tool at nevertheless outrageously inflated prices?

You can't blame anyone but yourself for buying Bitcoin at a certain price. Had the price gone up you would have a different tune.

Stop blaming others for your inadequacies. Thanks!  

Lol at my inadequacies. I'm already hiding my face in shame guys. Lay off

no need to.  everyone has to learn the fundamentals, even as a later early adopter  

i'm just relieved you're not one of what i think are bank trolls hammering Reddit today.  we had one punk put up a troll post this morning so i'm on high alert:

http://www.reddit.com/r/Bitcoin/comments/2hp0wp/i_had_a_weirdunsettling_bitcoin_experience_and/

after being challenged by me, the troll just disappeared.

[Odalv]

Inflationary spiral ? If cost of electricity is bigger than price of bitcoin and miners turn off their asics then nobody is unable to mine. It will take years until difficulty dropped. (it will take months to mine 2016 blocks by hobby miners to adjust difficulty (instead of 14 days) )

[cypherdoc]

Inflationary spiral ? If cost of electricity is bigger than price of bitcoin and miners turn off their asics then nobody is unable to mine. It will take years until difficulty dropped. (it will take months to mine 2016 blocks by hobby miners to adjust difficulty (instead of 14 days) )

it won't happen that way. 

you won't get a huge dropoff in hashing rate to cause such an air gap.  if we do, that would be a huge security risk for the network.  more likely though, if it has to happen at all, is that large mines go out and get USD loans to pay their variable costs to get them thru what will hopefully be from here a short term drop in the price.  that is, if they've managed their costs properly for a rainy day like we have now.  sure we could see a drop but it won't be dramatic.  they have to keep those asics running while they're still top of the line tech.  guys like me will also mine out of public duty, even if at a loss, so as to protect my overall investment in the space.  which is also why i run a bunch of full nodes.

[smoothie]

I can see hash rate dropping off at some point. It won't drop off in any huge way but it will stabilize the market given the constant increase in diff and the constant decrease in price.

[notme]

Honeybadger is bleeding to death. What's next guys?

we hit the cost of production floor, maybe undershoot by5-10%, coins become cheaper to buy than mine, some hashrate goes offline ... then the next super cycle can begin again.

That's what next you blind old fool

This.  I said months ago that we won't truly bottom until ASICs saturate and hashrate begins to taper.

[Odalv]

Inflationary spiral ? If cost of electricity is bigger than price of bitcoin and miners turn off their asics then nobody is unable to mine. It will take years until difficulty dropped. (it will take months to mine 2016 blocks by hobby miners to adjust difficulty (instead of 14 days) )

it won't happen that way. 

you won't get a huge dropoff in hashing rate to cause such an air gap.  if we do, that would be a huge security risk for the network.  more likely though, if it has to happen at all, is that large mines go out and get USD loans to pay their variable costs to get them thru what will hopefully be from here a short term drop in the price.  that is, if they've managed their costs properly for a rainy day like we have now.  sure we could see a drop but it won't be dramatic.  they have to keep those asics running while they're still top of the line tech.  guys like me will also mine out of public duty, even if at a loss, so as to protect my overall investment in the space.  which is also why i run a bunch of full nodes.

Yes, you will mine, because you want to protect your investment (as hobby miner), but what about mining farm(10,000,000 Ghash ..10%) will they pay millions of dollars for electricity.

[cypherdoc]

Inflationary spiral ? If cost of electricity is bigger than price of bitcoin and miners turn off their asics then nobody is unable to mine. It will take years until difficulty dropped. (it will take months to mine 2016 blocks by hobby miners to adjust difficulty (instead of 14 days) )

it won't happen that way. 

you won't get a huge dropoff in hashing rate to cause such an air gap.  if we do, that would be a huge security risk for the network.  more likely though, if it has to happen at all, is that large mines go out and get USD loans to pay their variable costs to get them thru what will hopefully be from here a short term drop in the price.  that is, if they've managed their costs properly for a rainy day like we have now.  sure we could see a drop but it won't be dramatic.  they have to keep those asics running while they're still top of the line tech.  guys like me will also mine out of public duty, even if at a loss, so as to protect my overall investment in the space.  which is also why i run a bunch of full nodes.

Yes, you will mine, because you want to protect your investment (as hobby miner), but what about mining farm(10,000,000 Ghash ..10%) will they pay millions of dollars for electricity.

as i said in my post, i think they will go out and get loans or offer equity financing if necessary to keep themselves running.  sure, its possible that a few players get shaken out but we are not going to see a precipitous drop in hashing rate.

[kodtycoon]

Inflationary spiral ? If cost of electricity is bigger than price of bitcoin and miners turn off their asics then nobody is unable to mine. It will take years until difficulty dropped. (it will take months to mine 2016 blocks by hobby miners to adjust difficulty (instead of 14 days) )

it won't happen that way. 

you won't get a huge dropoff in hashing rate to cause such an air gap.  if we do, that would be a huge security risk for the network.  more likely though, if it has to happen at all, is that large mines go out and get USD loans to pay their variable costs to get them thru what will hopefully be from here a short term drop in the price.  that is, if they've managed their costs properly for a rainy day like we have now.  sure we could see a drop but it won't be dramatic.  they have to keep those asics running while they're still top of the line tech.  guys like me will also mine out of public duty, even if at a loss, so as to protect my overall investment in the space.  which is also why i run a bunch of full nodes.

Yes, you will mine, because you want to protect your investment (as hobby miner), but what about mining farm(10,000,000 Ghash ..10%) will they pay millions of dollars for electricity.

as i said in my post, i think they will go out and get loans or offer equity financing if necessary to keep themselves running.  sure, its possible that a few players get shaken out but we are not going to see a precipitous drop in hashing rate.

what i suspect will happen is a shake out of some of the smaller miners once they reach the point that they cant afford to mine anymore leaving a further monopoly of big time miners. whether you like it or not, this is leading to further centralization. the big guys can last longer at a loss than the small guys.

[tabnloz]

coindesk article re: us military, intelligence and btc

http://www.coindesk.com/us-military-command-holds-educational-meeting-bitcoin-industry/