Mining Supercycle - bearish phase?

[dnaleor]

Somewhere in the back of my mind a therory is forming... I would like to call it the "Mining Supercycle"



As everubody knows, when the 2011 bubble popped, mining went down/stagnated
Until the next block halving, mining hashrate didn't move much. At the start of 2013 we saw the next big move, hashrane AND exchange rate

The two 2013 bubbles did pop but the hashrate didn't went down. Maybe miners are too optimistic about future return?
Current hashrate seems to slow down now. Could it be that we are entering a new "bearsih phase" in this supercycle?
Would this mean that we could go a lot lower exchange rate wise?

Remember: 2011: 30 USD to 2.5 USD
Now: 300 USD to... 25 USD  

I want to hear your thoughts.



PS: this is my most bearish prediction ever. I was a perma bull and sometimes too greedy. I think i've learned my lesson, that's why i'm trying to find counter arguments to the current "we are at the bottom" talks.

[1714892464]

1714892464

[1714892464]

1714892464

[pa]

As price rises so does hashrate, however hash rate lags price. As the price climbs people start to see mining gear as a better investment then buying BTC direct, so less money goes into the market and more goes into mining. This causes a cyclical top. When price tops out you still have a buttload of hash rate that is on order, waiting to be deployed, or in the process of coming online. As price drops, this puts pressure on miners to sell, and as the hash rate increases  so does selling pressure, at which point price starts to lag hash rate. As mining becomes less profitable the tide changes, all the money going into mining gear shifts back to buying cheap coin. Which drives up demand, only this time there is even more dollars chasing that limited supply (based on the principal that adoption is constantly increasing). As the prise starts to rise, miners are able to recoup their capital investment in dollar terms and start to think that perhaps holding is a better option, as the price is rising. This cuts supply and drives the price higher, and thus the cycle repeats.

This cycle exists because miners are (imho wrongly) still measuring things in dollars. When miners start looking in terms of BTC only thats when this cycle will start to break down. That's where your piece of pie comes in, and thats what people should really be looking at long term. (miners or investors). If BTC becomes money, what percentage of it do you own.

When you compare that to the present situation with dollars, pounds or whatever your local currency, you see how little you need just to 'hedge' your position. It astounds me that people don't at least buy that *just in case* especially given how little that actually costs right now.

I guess thats why banks are so rich though eh

This was the best explanation I've seen of the relationship between hashrate and price.

[sniveling]

I'm not a mining expert, but I heard it would take an extremely long time (years and years) for the difficulty to drop down low enough to make it possible to mine a bitcoin for $25. That's if nearly all miners stop mining today.

[Biodom]

I also think that the relentless bear market will not finish until a large portion of miners are not mining anymore. In 2011 we had ~50% decline in hashing, but it happened at the last third of correction. I also compared charts: hashing plateaued first (as price declined from ~$32-35 to $7-8, then declined sharply as price went from ~$7-8 to ~$2). We are currently in the plateauing stage, but still rising marginally.

There will be NO bull market until hashing declines over 1-2 mo period. It will happen if price goes to anywhere between $72-240. $72 would correspond to % of decline equal to 2011.

[mutha]

Somewhere in the back of my mind a therory is forming... I would like to call it the "Mining Supercycle"



As everubody knows, when the 2011 bubble popped, mining went down/stagnated
Until the next block halving, mining hashrate didn't move much. At the start of 2013 we saw the next big move, hashrane AND exchange rate

The two 2013 bubbles did pop but the hashrate didn't went down. Maybe miners are too optimistic about future return?
Current hashrate seems to slow down now. Could it be that we are entering a new "bearsih phase" in this supercycle?
Would this mean that we could go a lot lower exchange rate wise?

Remember: 2011: 30 USD to 2.5 USD
Now: 300 USD to... 25 USD  

I want to hear your thoughts.



PS: this is my most bearish prediction ever. I was a perma bull and sometimes too greedy. I think i've learned my lesson, that's why i'm trying to find counter arguments to the current "we are at the bottom" talks.

I have read from various information sources, at the moment you have a series of events taking place. So feel free to take it or leave it on this info.

1. In America its is tax lose time, so you have "tax selling" selling at a loss for "tax credits" shorting against the box and various other schemes, but the basics are you sell your position (or short it) for 30 days and then buy back in and receive tax credits.

2. The USA government (IRS, SEC and several other entities) are creating mass amounts of FUD causing many people to wait and see or stay out.

3. The volatile BTC prices are scaring away large retail users, because of the booking/profit-loss hourly or daily swings.

Any how if all this is correct 290 USD will be the bottom of the bear market and BTC will bounce back to prior levels. Unless some huge geopolitical event occurs and upsets the "analysts crystal ball"

[MrBig]

There are a few different factors to consider now compared to the 2011 bubble. There were no ASICs or mega-mining farms back then. Some of these mining farms are still making nice profits even at the current price, so there's no reason for them to shut off their miners yet. The one's mining at a loss right now will just get hit harder once they're forced to sell their btc in order to cover expenses.

[xhomerx10]

I'm not a mining expert, but I heard it would take an extremely long time (years and years) for the difficulty to drop down low enough to make it possible to mine a bitcoin for $25. That's if nearly all miners stop mining today.

  The retarget occurs every 2016 blocks and there is a built in function to prevent large swings so the number will not change by more than a factor of 4 each retarget.  Taking the current data as an example, it the network hash rate went down to 10% of what it is, it would take an average of 94 minutes to mine a block where the Bitcoin program tries to keep it around 10 (it's a little less than that right now).  It would be around 132 days for the next retarget at the most (provided there were 2016 blocks to go until the next retarget).  The diff would then quarter on the retarget and it would take about 23.5 minutes per block OR 33 days until the next retarget which would put everything back on track.  So for a 90% reduction in miners (or at least hash rate), it would take 165 at the most to get back to the normal 10 minutes per block.  This is all theoretical of course.

 Now, with the network hash rate at 1/10 of what it currently is or 27274.161 TH/s, a kilowatt hour of electricity costing $0.15 and your miner consuming 1 W/Gh at the wall, a Bitcoin should cost you around $27 to produce.  Not bad - you might be able to do this in less than 165 days if you can convince 90% of the network to shut down operations
 

[sniveling]

I'm not a mining expert, but I heard it would take an extremely long time (years and years) for the difficulty to drop down low enough to make it possible to mine a bitcoin for $25. That's if nearly all miners stop mining today.

  The retarget occurs every 2016 blocks and there is a built in function to prevent large swings so the number will not change by more than a factor of 4 each retarget.  Taking the current data as an example, it the network hash rate went down to 10% of what it is, it would take an average of 94 minutes to mine a block where the Bitcoin program tries to keep it around 10 (it's a little less than that right now).  It would be around 132 days for the next retarget at the most (provided there were 2016 blocks to go until the next retarget).  The diff would then quarter on the retarget and it would take about 23.5 minutes per block OR 33 days until the next retarget which would put everything back on track.  So for a 90% reduction in miners (or at least hash rate), it would take 165 at the most to get back to the normal 10 minutes per block.  This is all theoretical of course.

 Now, with the network hash rate at 1/10 of what it currently is or 27274.161 TH/s, a kilowatt hour of electricity costing $0.15 and your miner consuming 1 W/Gh at the wall, a Bitcoin should cost you around $27 to produce.  Not bad - you might be able to do this in less than 165 days if you can convince 90% of the network to shut down operations
 

Thanks for the expert explanation. So it might only take about half a year to mine a bitcoin for $25 in electricity costs (excluding hardware costs) if 90% of the mining capacity switches off overnight? How much does the hardware cost, and how long before it's worn out, or too low power for the job?

[criptix]

U guys forgot the price of the miner, they dont come for free

[pixl8tr]

U guys forgot the price of the miner, they dont come for free

Yeah lots of things they are forgetting in that example. Cooling, Internet, taxes, staffing , location costs( Building), Security, Lawyers......

[xhomerx10]

U guys forgot the price of the miner, they dont come for free

Yeah lots of things they are forgetting in that example. Cooling, Internet, taxes, staffing , location costs( Building), Security, Lawyers......

 You guys are hilarious 
Okay, here goes, the 90% who shut off their miners will surely be putting them curbside for recycling so you can grab one or two for free.   Use a bicycle you already own (borrow one if you don't) so there's no gasoline, licensing or insurance costs.  Only do this in areas where Bitcoin, mining and rummaging are legal (so zero lawyer fees).  If you already pay for internet (and many do), there is no added cost.  Since you got it for free, who cares if it gets stolen (no security costs), do it yourself and keep it small (no staffing) , if you don't already own/rent a dwelling do not attempt to mine (0 added cost for location), rummage for a miner that includes a fan (no cooling costs) and last but not least, there is no tax on generating a Bitcoin anywhere - you only get taxed when you convert it to fiat (avoid fiat).  Also, avoid rummaging for anything that says BFL or KNC on it, as it will likely somehow scam you

 There you go.  So in the aforementioned doomsday scenario, a rummaged 1TH/s miner will mint you a coin in 7.4 days for an electricity cost of approx. $26.70 ($0.15/kWhr, 1w/Gh device)

[mutha]

Somewhere in the back of my mind a therory is forming... I would like to call it the "Mining Supercycle"



As everubody knows, when the 2011 bubble popped, mining went down/stagnated
Until the next block halving, mining hashrate didn't move much. At the start of 2013 we saw the next big move, hashrane AND exchange rate

The two 2013 bubbles did pop but the hashrate didn't went down. Maybe miners are too optimistic about future return?
Current hashrate seems to slow down now. Could it be that we are entering a new "bearsih phase" in this supercycle?
Would this mean that we could go a lot lower exchange rate wise?

Remember: 2011: 30 USD to 2.5 USD
Now: 300 USD to... 25 USD  

I want to hear your thoughts.



PS: this is my most bearish prediction ever. I was a perma bull and sometimes too greedy. I think i've learned my lesson, that's why i'm trying to find counter arguments to the current "we are at the bottom" talks.

I have read from various information sources, at the moment you have a series of events taking place. So feel free to take it or leave it on this info.

1. In America its is tax lose time, so you have "tax selling" selling at a loss for "tax credits" shorting against the box and various other schemes, but the basics are you sell your position (or short it) for 30 days and then buy back in and receive tax credits.

2. The USA government (IRS, SEC and several other entities) are creating mass amounts of FUD causing many people to wait and see or stay out.

3. The volatile BTC prices are scaring away large retail users, because of the booking/profit-loss hourly or daily swings.

Any how if all this is correct 290 USD will be the bottom of the bear market and BTC will bounce back to prior levels. Unless some huge geopolitical event occurs and upsets the "analysts crystal ball"

Called that one!!!  Except for the $290 basement, $320 was the sub-basement.

No reason I can see BTC is not at $400 in then next 3 days, settle and stage for the push for $500 by end of the month.

[fewcoins]

$400 is here but with all these mined coins slowly trickling into sales, more and more everyday, it could get really messy really quick 

[mutha]

$400 is here but with all these mined coins slowly trickling into sales, more and more everyday, it could get really messy really quick 

Those coins will be needed to cover the against the tax selling shorts, thats why you will see a base and staging set at $400.... FUD is a 2 way street and this time the Tax sellers are feeling the FUD.

I admit the early Tax selling caught me off guard, BTC is not traditional like many other Tax selling but it only makes sense everyone wants their BTC positions back before the Holiday spending starts.