Price is dropping and Difficulty is increasing !!!

[Rannasha]

How is this possible ? How come more miners are joining the league at such a low price ? Is not it obvious that miners will spend more than what they'll make from mining at this below 300 price and upcoming 12% difficulty jump ?

New mining hardware still earns more than it costs to run, so if someone has such a device, it'll be worth operating it even if it might not earn back its initial cost. And production of mining equipment isn't instantaneous, so you're now seeing stuff coming online that was produced and/or ordered some time ago, when difficulty was lower and the price was higher. The people owning these new machines, be they producers or end users, may not be happy that they produced and/or ordered them, but they will still use them to minimize losses.

[newIndia]

How is this possible ? How come more miners are joining the league at such a low price ? Is not it obvious that miners will spend more than what they'll make from mining at this below 300 price and upcoming 12% difficulty jump ?

New mining hardware still earns more than it costs to run, so if someone has such a device, it'll be worth operating it even if it might not earn back its initial cost. And production of mining equipment isn't instantaneous, so you're now seeing stuff coming online that was produced and/or ordered some time ago, when difficulty was lower and the price was higher. The people owning these new machines, be they producers or end users, may not be happy that they produced and/or ordered them, but they will still use them to minimize losses.

How will they minimize the loss unless they have free electricity ? Because, electricity cost will mostly eat up the mining revenue at this bitcoin price. Am I wrong ?

[sgk]

i thought this is fundamental bitcoin rule, no dependence between price. i am not very aware about btc mining..so, sorry

There is no direct dependency, but indirectly, there is. To keep miners switched on at a higher difficulty, bitcoin's FIAT value need to rise, because miners are expected to pay their bills in FIAT.

So, I ask it here again:
Is there any proof that miners are selling their mined Bitcoin to pay their bills? Last time I checked recent block rewards, it seemed like they are hodling BIG.
(I expect people to ignore me again or come up with some more purely speculative statements)

I agree with you. If I have thousands of dollars to put into a very risky 'investment' with a fair possibility to lose all of it, I may as well have enough money to pay my electricity bills without a problem for a foreseeable future.

No need to sell my 'precious' BTC - especially when I believe in a bright future (and yes I WOULD believe in a bright future otherwise I wouldn't have spent my hard-eaned dollars on it).

[Rawted]

It's almost as if price and difficulty have no correlation.....

[picolo]

It's almost as if price and difficulty have no correlation.....

A lower price of BTC should push the difficulty lower or make it increase more slowly.

[Equate]

It's almost as if price and difficulty have no correlation.....

What about cloud mining companies who have no option other than dumping whatever they mine  ?

[Rawted]

It's almost as if price and difficulty have no correlation.....

A lower price of BTC should push the difficulty lower or make it increase more slowly.

Incorrect. No matter which factor you try to apply, there is no correlation. At all.

[Rawted]

It's almost as if price and difficulty have no correlation.....

What about cloud mining companies who have no option other than dumping whatever they mine  ?

What about them? How much are they dumping? Is it over 3600 coins per day (the current mint rate)? Which cloud mining companies?

[newIndia]

It's almost as if price and difficulty have no correlation.....

A lower price of BTC should push the difficulty lower or make it increase more slowly.

Incorrect. No matter which factor you try to apply, there is no correlation. At all.

Is there any chart available where the historical data of price and log of difficulty is plotted against each other ?

[louisreel]

It's almost as if price and difficulty have no correlation.....

A lower price of BTC should push the difficulty lower or make it increase more slowly.

Incorrect. No matter which factor you try to apply, there is no correlation. At all.

Is there any chart available where the historical data of price and log of difficulty is plotted against each other ?

http://www.bitcoinx.com/bitcoin-average-all-days-chart/

[JamesBrown]

How is this possible ? How come more miners are joining the league at such a low price ? Is not it obvious that miners will spend more than what they'll make from mining at this below 300 price and upcoming 12% difficulty jump ?

maybe it's an attack by a malicious party in anticipation of miners dropping out

see here:

https://bitcointalk.org/index.php?topic=912190.0

scenario:

malicious player comes in with additional hash causing higher diff. Next a selloff occurs, miners drop out, the malicous actor turns off his hash:

THE END

Difficulty drops? Other comes in? unmotivated malicious player ends up loosing?

[newIndia]

How is this possible ? How come more miners are joining the league at such a low price ? Is not it obvious that miners will spend more than what they'll make from mining at this below 300 price and upcoming 12% difficulty jump ?

....and we have the first victim.

Cex.io is going to stop cloud mining.

Taking into account the Bitcoin price drop, and the increase of difficulty, we will pause cloud mining after the next difficulty increase

Source: https://twitter.com/jeff_smith01/status/554648104826593280

CEX.IO Temporarily Suspends Cloud Mining Services  http://blog.cex.io/?p=13074

Source: https://twitter.com/cex_io/status/554623863334903809

[mlferro]

How is this possible ? How come more miners are joining the league at such a low price ? Is not it obvious that miners will spend more than what they'll make from mining at this below 300 price and upcoming 12% difficulty jump ?

....and we have the first victim.

Cex.io is going to stop cloud mining.

Taking into account the Bitcoin price drop, and the increase of difficulty, we will pause cloud mining after the next difficulty increase

Source: https://twitter.com/jeff_smith01/status/554648104826593280

CEX.IO Temporarily Suspends Cloud Mining Services  http://blog.cex.io/?p=13074

Source: https://twitter.com/cex_io/status/554623863334903809

it sure is a big problem. cex.io if I remember correctly is the largest  company in the cloud mining.

[NUFCrichard]

How is this possible ? How come more miners are joining the league at such a low price ? Is not it obvious that miners will spend more than what they'll make from mining at this below 300 price and upcoming 12% difficulty jump ?

New mining hardware still earns more than it costs to run, so if someone has such a device, it'll be worth operating it even if it might not earn back its initial cost. And production of mining equipment isn't instantaneous, so you're now seeing stuff coming online that was produced and/or ordered some time ago, when difficulty was lower and the price was higher. The people owning these new machines, be they producers or end users, may not be happy that they produced and/or ordered them, but they will still use them to minimize losses.

Yes it makes more than it costs to run, but you have to RoI, and that will take a very very long time at the moment, if ever.

[picolo]

How is this possible ? How come more miners are joining the league at such a low price ? Is not it obvious that miners will spend more than what they'll make from mining at this below 300 price and upcoming 12% difficulty jump ?

....and we have the first victim.

Cex.io is going to stop cloud mining.

Taking into account the Bitcoin price drop, and the increase of difficulty, we will pause cloud mining after the next difficulty increase

Source: https://twitter.com/jeff_smith01/status/554648104826593280

CEX.IO Temporarily Suspends Cloud Mining Services  http://blog.cex.io/?p=13074

Source: https://twitter.com/cex_io/status/554623863334903809

it sure is a big problem. cex.io if I remember correctly is the largest  company in the cloud mining.

cex.io has a low price right now but extremely high costs and the ghs will only have value if Bitcoin price rises or difficulty decreases.

You can still ROI and hopefully make a good profit if your maintenance costs are low.

[Nagle]

....and we have the first victim.
Cex.io is going to stop cloud mining.

Taking into account the Bitcoin price drop, and the increase of difficulty, we will pause cloud mining after the next difficulty increase

Source: https://twitter.com/jeff_smith01/status/554648104826593280

Now that's interesting. Their blog post indicates that the mining is outsourced: "Currently all cloud mining/maintenance costs are directed to the Hardware provider, hence, we are open for negotiations with additional mining hardware providers, who can offer favourable terms." Cex isn't a miner; they're a broker for mining capacity.

Apparently they had the option to stop paying their miners. Their contracts with miners must be highly favorable to CES. Now somebody else is stuck with a huge amount of unprofitable hardware. The miners may come crawling back with more favorable terms, trying to mitigate their losses. Or they may just shut down. We'll see the results in the hash rate.

[picolo]

....and we have the first victim.
Cex.io is going to stop cloud mining.

Taking into account the Bitcoin price drop, and the increase of difficulty, we will pause cloud mining after the next difficulty increase

Source: https://twitter.com/jeff_smith01/status/554648104826593280

Now that's interesting. Their blog post indicates that the mining is outsourced: "Currently all cloud mining/maintenance costs are directed to the Hardware provider, hence, we are open for negotiations with additional mining hardware providers, who can offer favourable terms." Cex isn't a miner; they're a broker for mining capacity.

Apparently they had the option to stop paying their miners. Their contracts with miners must be highly favorable to CES. Now somebody else is stuck with a huge amount of unprofitable hardware. The miners may come crawling back with more favorable terms, trying to mitigate their losses. Or they may just shut down. We'll see the results in the hash rate.

Miners can mine with the equipement they have and you are speculating that they already produce a lot of hardware destined to Cex, they may not have much equipement on hand.

[Sakarias-Corporation]

with the new mining tech some people can stil ROI after sone MONTHS of mining. so why not buy a miner and just mine and hope for the price to go up ?

[picolo]

with the new mining tech some people can stil ROI after sone MONTHS of mining. so why not buy a miner and just mine and hope for the price to go up ?

You need to have ROI without any BTC price increase to make the decision of investing in mining but you could ROI in 100 days if you buy cloud mining to the correct cloud mining companies and they deliver the payments until you ROI.

[Searing]

with the new mining tech some people can stil ROI after sone MONTHS of mining. so why not buy a miner and just mine and hope for the price to go up ?

You need to have ROI without any BTC price increase to make the decision of investing in mining but you could ROI in 100 days if you buy cloud mining to the correct cloud mining companies and they deliver the payments until you ROI.

unless they too look at costs like cex.io and say they just can't get the numbers to fly (which at thest btc prices seems likely) expect cloud mining (the legit ones or as legit as cloud minng gets) to all start to go belly up...at these prices the goldfish are all dying in the bowl.