The "miners are dumping thousands of coins every day" argument

[johnyj]

Generally, yes but when the accessibility of asics are on a level of plug and play and people only required to have money to have their equipment (be it physical or virtual) the majority of them might not know better and just dump as they go. Same could go for bigger scale mining operations as well. Maybe too many of those people jumped in half assed a few months ago and now grasping for air. And I guess we also can't connect the price and the difficulty because with better and better asics it's technically cheaper to maintain the same difficulty.

If it is truly about the miners dumping more than before, my uneducated guess is that we're looking at a long period of downtrend - if nothing major would affect the market one way or the other, but there's something always going on.

Good points

I doubt if there are still some people that buy mining gears to mine coin and dump them directly, this is a proven way of going broke since April

See my signature, the daily coin supply will increase in the coming years, due to more and more early investors starting to cash out part of their coins. This increase will stop at next reward halving, which is still 2 years away

However, the demand side is picking up very quickly. As a bitcoin broker, I can feel that the daily net purchase fiat volume is almost 4 times bigger than last year

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[exocytosis]

Let's say you're right, Ibian ... Let's say the decreasing price isn't primarily caused by miners dumping hundreds/thousands of coins every day ...

Then what, exactly, is causing the price to fall so much, week after week, month after month? You still haven't explained that, as far as I can tell?

To be fair: Miners dumping thousands of coins isn't the only reason BTC price is falling (and will continue to fall), but it is indeed one of the primary reasons.

[Peter R]

Of course miners selling coins affects the price.  If there's insufficient demand to absorb the new coin supply, then the price will fall until demand picks up.  This is bitcoin's distribution system doing what it's designed to do: distribute coins to those who value them.    

Bitcoin is a strategizing woman that will use your lust to accomplish her goals.  It's your desire for wealth that precipitates the boom, and it's your hope and envy that fuels the accompanying media frenzy, propelling us another rung up the market-cap ladder.  And she knows this.  She also knows that in your despair you will sell your coins to those she hasn't dated yet, as though you're burning love notes from a woman who broke your heart.      

She has nobler goals than to enrich you.  Although some of you will score and some of you will strike out, to her you were all only useful tools.  We're building a new decentralized economy that, if successful, will reshape the world in unfathomable ways.  She's the foundation of this new economy--sound money where each coin was forged by the greatest physical efforts of man to strangely produce a purely-digital asset…a digital asset that can be transferred in less than a second across the world without the permission of an authority or the assistance of a third party.  She is an evolution in money.    

Indeed the price must grow for the experiment to succeed, but it's more important that the price be the right price to best distribute coins to those who want them.  The issuance of new coins is what keeps downwards-pressure on the price, testing the faith of hodlers: "why are your coins so special if miners are finding new coins everyday?"  It prevents the price from deviating too far from true demand, as ruthless miners will put to rest the ambitions of lustful.  This is necessary.  We're all just playing out our roles.  

How will it end?  I don't know.  Tales of great ambition are fraught with great tragedy.  Only time will tell if she'll seduce her way to the very top.    

[Torque]

Of course miners selling coins affects the price.  If there's insufficient demand to absorb the new coin supply, then the price will fall until demand picks up.  This is bitcoin's distribution system doing what it's designed to do: distribute coins to those who value them.    

Bitcoin is a strategizing women that will use your lust to accomplish her goals.  It's your desire for wealth that precipitates the boom, and it's your hope and envy that fuels the accompanying media frenzy, propelling us another rung up the market-cap ladder.  And she knows this.  She also knows that in your despair you will sell your coins to those she hasn't dated yet, as though you're burning love notes from a women who broke your heart.      

She has nobler goals than to enrich you.  Although some of you will score and some of you will strike out, to her you were all only useful tools.  We're building a new decentralized economy that, if successful, will reshape the world in unfathomable ways.  She's the foundation of this new economy--sound money where each coin was forged by the greatest physical efforts of man to strangely produce a purely-digital asset…a digital asset that can be transferred in less than a second across the world without the permission of an authority or the assistance of a third party.  She is an evolution in money.    

Indeed the price must grow for the experiment to succeed, but it's more important that the price be the right price to best distribute coins to those who want them.  The issuance of new coins is what keeps downwards-pressure on the price, testing the faith of hodlers: "why are your coins so special if miners are finding new coins everyday?"  It prevents the price from deviating too far from true demand, as ruthless miners will put to rest the ambitions of lustful.  This is necessary.  We're all just playing out our roles.  

How will it end?  I don't know.  Tales of great ambition are fraught with great tragedy.  Only time will tell if she'll seduce her way to the very top.    

+1. Haha, I really love this post Peter.

[SecureExchange]

Let's entertain this argument for a moment.

1) You buy mining gear with fiat that is not needed elsewhere. As this fiat was available there is no need to dump coins in a bear market. Wait for next ATH. Net market pressure: Up.

2) You take a loan, mine and sell regularly to pay the loan back. You do not sell 100% of them regardless of price because you did your calculations beforehand. The coins you do not sell are now unavailable to the rest of the market, increasing scarcity and therefore price. Net market pressure: Up.

3) You are bad at math and mine at a loss. You either turn off your miner or bleed money until you end up in the gutter. Net market pressure: Down, but temporarily.

Not being a miner myself, it's possible I missed something. But so far, it looks like sustainable mining is good for the price.

I'm actually looking to be proven wrong here. But with logic and numbers, not trolling. Thanks in advance.

I like your first point, fiat analogy is a spot on.

[zimmah]

Let's entertain this argument for a moment.

1) You buy mining gear with fiat that is not needed elsewhere. As this fiat was available there is no need to dump coins in a bear market. Wait for next ATH. Net market pressure: Up.

2) You take a loan, mine and sell regularly to pay the loan back. You do not sell 100% of them regardless of price because you did your calculations beforehand. The coins you do not sell are now unavailable to the rest of the market, increasing scarcity and therefore price. Net market pressure: Up.

3) You are bad at math and mine at a loss. You either turn off your miner or bleed money until you end up in the gutter. Net market pressure: Down, but temporarily.

Not being a miner myself, it's possible I missed something. But so far, it looks like sustainable mining is good for the price.

I'm actually looking to be proven wrong here. But with logic and numbers, not trolling. Thanks in advance.

do you have any idea how much a modern miner uses in electricity monthly?

some of them use hundreds of dollar per month, just to stay working.

[arbitrage001]

Sounds like a good analysis to me, but unfortunately there are a lot in group 3. These will go out of business soon, and the horror stories will stop people making bad fiat investments in mining rigs, and take the pressure off the price. On the plus side it's getting easier for people to enter the market now with the relatively low prices.

The mining community never seem to run out of suckers. This phenomenal of "mining at a loss" has been going on for a while now.

[redsn0w]

So is this a real solution ?

Turn off al the minerd hardware and use only a normal  personal computer ? It is only a playful solution  .

[Tzupy]

A large mining operation most likely has some staff able to do good TA. For them it matters when they sell in order to maximize profits.
If the TA staff sees a clear downtrend for the next month, they may decide to sell all currently mined and some of the stash, to have fiat for bills until the recovery.

[An amorous cow-herder]

Let's say you're right, Ibian ... Let's say the decreasing price isn't primarily caused by miners dumping hundreds/thousands of coins every day ...

Then what, exactly, is causing the price to fall so much, week after week, month after month? You still haven't explained that, as far as I can tell?

I would assume simply dumping like 500 coins a day would be sufficient to explain the recent decline. If the amount of fiat entering the exchanges is very low (and, to be fair, its not like there has been any mayor news to attract anyone) the exchanges would bleed aroung $6M per month just from those 500 coins a day. Distribute 15k coins evenly among the exchanges (simply use a the "Estimate trading" tool on bitcoinwisdom to calculate it for you) and look at the results. Pretty much in line with what we are seeing. You know, simply applying Occams razor ...

[oda.krell]

Of course miners selling coins affects the price.  If there's insufficient demand to absorb the new coin supply, then the price will fall until demand picks up.  This is bitcoin's distribution system doing what it's designed to do: distribute coins to those who value them.   

Bitcoin is a strategizing women that will use your lust to accomplish her goals.  It's your desire for wealth that precipitates the boom, and it's your hope and envy that fuels the accompanying media frenzy, propelling us another rung up the market-cap ladder.  And she knows this.  She also knows that in your despair you will sell your coins to those she hasn't dated yet, as though you're burning love notes from a women who broke your heart.       

She has nobler goals than to enrich you.  Although some of you will score and some of you will strike out, to her you were all only useful tools.  We're building a new decentralized economy that, if successful, will reshape the world in unfathomable ways.  She's the foundation of this new economy--sound money where each coin was forged by the greatest physical efforts of man to strangely produce a purely-digital asset…a digital asset that can be transferred in less than a second across the world without the permission of an authority or the assistance of a third party.  She is an evolution in money.   

Indeed the price must grow for the experiment to succeed, but it's more important that the price be the right price to best distribute coins to those who want them.  The issuance of new coins is what keeps downwards-pressure on the price, testing the faith of hodlers: "why are your coins so special if miners are finding new coins everyday?"  It prevents the price from deviating too far from true demand, as ruthless miners will put to rest the ambitions of lustful.  This is necessary.  We're all just playing out our roles.   

How will it end?  I don't know.  Tales of great ambition are fraught with great tragedy.  Only time will tell if she'll seduce her way to the very top.   

Beautiful.

(maybe just a tiny bit sexist as well, but mainly: beautiful :D)

[sbrzol]

Good points

I doubt if there are still some people that buy mining gears to mine coin and dump them directly, this is a proven way of going broke since April

if i were a chinese billionaire\millionaire who want to leave China with their wealth then bitcoin mining would be a perfect solution.
You buy the mining hardware and pay everything with yuan and get dollar after selling bitcoin 

the price does not matter,  so you will countinue to mine with a loss too , (if the mining cost of 1 BTC is more than its price)  10%-20%  no matter  ,
who cares , if you can convert yuan to dollar without any limit

[piramida]

She has nobler goals than to enrich you.  Although some of you will score and some of you will strike out, to her you were all only useful tools.

Yeah great post, so unlikely here! Most people don't understand this and actually think She owes them something and then get pretty pissed when She does not deliver. Good thing is, there is nothing they can do to even scratch her

PS I never thought of bitcoin as her, maybe you are right She does have some wild mood swings.

[Bicmac1973]

Good points

I doubt if there are still some people that buy mining gears to mine coin and dump them directly, this is a proven way of going broke since April

if i were a chinese billionaire\millionaire who want to leave China with their wealth then bitcoin mining would be a perfect solution.
You buy the mining hardware and pay everything with yuan and get dollar after selling bitcoin 

the price does not matter,  so you will continue to mine with a loss too , (if the mining cost of 1 BTC is more than its price)  10%-20%  no matter  ,
who cares , if you can convert yuan to dollar without any limit

^ Exactly this is the point! Now imagine you have a mining farm and can provide this special kind of relocation assistance service to wealthy Chinese countrymen.
I have read an article a few days ago that some Chinese miners even use "free" electricity by installing rogue mining farms in government-owned facilities. The minted bitcoins can be bought in Yuan, transferred to foreign Exchanges and converted to USD. This business model could work for a very long time, even if the BTC is down at 50$ or less and difficulty goes up even higher.

[gustav]

this is a non-issue for people holding Unobtanium

inflation is a fact and can be pinned down exactly in coins.

See my other topic on this:
https://bitcointalk.org/index.php?topic=793049.msg8933157#msg8933157

fiat has inflation. Bitcoin  has lower inflation than fiat. Gold has inflation too. Unobtanium has the lowest inflation of them all.

Discussing if miners sell or hold the coins they mine is really useless. Expect them to sell now or later.

"Tradevolume divided by new coins minted" was bitcoin around 18 to 1 yesterday (globally). Uno was approx. 22 to 1 today on tiny volume compared to bitcoin. Other coins high on the "tradevolume divided by new coins" indicator are LTC and DRK.

just divide tradevolume by new coins minted to estimate how big the impact of that inflation is.

Demand vs supply.

Life can be so easy.