Miners are killing bitcoin

[mayax]

Mining isn't going to stop because the price drops. It could drop to $10 per BTC and there'd still be plenty of hashing power to "validate" the transactions.

This is incorrect. The miners have costs that are based in fiat, electricity. They need a way to pay for these costs, they use the bitcoin they mine. If the bitcoin they mine does not cover the electric costs then they will stop mining. Even if they plan to pay for their electric costs out of separate funds and to hodl the bitcoin they mine, they would still stop mining because they would be better off buying the bitcoin on an exchange

If the price were 10 $/BTC (as it was a couple of years ago), the miners as a whole would receive only 36'000 $/day.  At 0.10 $ per kWh (say), that could pay for 360'000 kWh per day, or 15'000 kW.

Therefore, in that situation, almost all of the current miners would have pulled the plug; but there will be still be the equivalent of 10'000 (say) ASIC rigs in use, each consuming 1 kW and doing 1 TH/s, and their owners together would make 12'000 $/day of profit.  The total network power would then be 10'000 TH/s, or 10 PH/s.  Which, surprise, is about 10$/220$ of the current network power.

if there are 10,000 miners that means 1,2 USD per miner/day and 36 USD profit per month.  
 ...also, the kWh price is different.
example :  New York  =  USD $0.20/kWh which will double your cost estimations.

You can even triple the estimated profit. let's say 100 USD per month or 200 USD...would you "mine" for this amount?
How would you buy new hardware in 8-10 months? from what profit?

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[MrTeal]

Mining isn't going to stop because the price drops. It could drop to $10 per BTC and there'd still be plenty of hashing power to "validate" the transactions.

This is incorrect. The miners have costs that are based in fiat, electricity. They need a way to pay for these costs, they use the bitcoin they mine. If the bitcoin they mine does not cover the electric costs then they will stop mining. Even if they plan to pay for their electric costs out of separate funds and to hodl the bitcoin they mine, they would still stop mining because they would be better off buying the bitcoin on an exchange

If the price were 10 $/BTC (as it was a couple of years ago), the miners as a whole would receive only 36'000 $/day.  At 0.10 $ per kWh (say), that could pay for 360'000 kWh per day, or 15'000 kW.

Therefore, in that situation, almost all of the current miners would have pulled the plug; but there will be still be the equivalent of 10'000 (say) ASIC rigs in use, each consuming 1 kW and doing 1 TH/s, and their owners together would make 12'000 $/day of profit.  The total network power would then be 10'000 TH/s, or 10 PH/s.  Which, surprise, is about 10$/220$ of the current network power.

It would take time for the miners to stop mining and when the hashrate would drop by that much then it would take a very long time for the next 2016 blocks to confirm.

Your statement is contradictory. If takes much time for miners to pull the plug, the difficulty will ramp down more slowly.

[johnyj]

Those miner with free electricity will sit comfortably with their mining rig. Those with expensive electricity will stop the mining and buy coins instead. And those who want to make fiat money through mining will all quit

[mayax]

Those miner with free electricity will sit comfortably with their mining rig. Those with expensive electricity will stop the mining and buy coins instead. And those who want to make fiat money through mining will all quit

99.9% wants to make fiat money from their work

[the joint]

I think this is the biggest problem facing bitcoin right now.  Selling pressure + non profitable mining is not a good situation in this very pivotal time.

There's really nothing useful or informative about this assumption.  We already know that mining tends towards an equilibrium between difficulty and price.  Since we've been near equilibrium for some time now, we can expect the difficulty to drop if the price continues to drop (which it will, and it already has).

Way to put me in my place... I guess?

That's why I didn't associate your name with your quote.

You first go on to say that my statement was an 'assumption,' which in fact it is anything but.  Then you further reinforce this by simply reiterating exactly what I said as fact.

The point is that it's a poor context in which to explain the state of the market.   It basically equates to "there's selling pressure because people aren't buying" and "mining is less profitable when it's less profitable."   Both of these statements are obvious, yet neither necessarily means anything about market health (i.e. whether it's a 'good' or 'bad' situation).  It's also like saying "selling pressure + non profitable mining is not a good situation in this very pivotal time which can be defined as a period of selling pressure + non-profitable mining."

A point I would concede is that non-profitable mining can lead to additional selling pressure if miners panic and race for the exit to salvage whatever ROI they think is left.

So yeah.  I don't know why you chose to re-quote me if you simply agreed with what I said.  And I never claimed any of my post was earth-shattering news, but rather just pointed out the obvious for those who quite ostensibly are unaware, and somehow think this is due to inflation.  

I don't agree with what you said inasmuch as I don't agree that "selling pressure + non-profitable mining" is the biggest problem facing Bitcoin.  I wouldn't, for example, draw the conclusion that "buying pressure + profitable mining" are Bitcoin's greatest advantages.  The rally to >$1100 met both of these criteria, but all it did was introduce intense market instability as a result of a gross mismatch of monetary input and output.  Price and personal performance are not in any way direct indicators of market health.

Cool pretentious attempt at a counter-rant though, brah.  You so erudite!

We all ride high horses.  I refer you to this: https://bitcointalk.org/index.php?topic=923018.msg10142913#msg10142913

[grendel25]

Miners are the best part of bitcoin.  It's what made bitcoin even possible.  The problem with mining is that it wasn't very well considered for the lay person.  There should have been more invested into preventing ASICs from taking over.

But don't blame miners.  Blame the technology devs.

[JorgeStolfi]

there will be still be the equivalent of 10'000 (say) ASIC rigs in use, each consuming 1 kW and doing 1 TH/s, and their owners together would make 12'000 $/day of profit.  The total network power would then be 10'000 TH/s, or 10 PH/s.  Which, surprise, is about 10$/220$ of the current network power.

if there are 10,000 miners that means 1,2 USD per miner/day and 36 USD profit per month.  

Yes; but then (as of now) the economics will strongly favor large miners, so there may be just one company with all the 10'000 rigs, collecting all the 36'000 $/day and making 12'000 $/day of profit.

...also, the kWh price is different.  example :  New York  =  USD $0.20/kWh which will double your cost estimations.

... which means that almost all the mining will be done in places with cheap electricity.  This would be the case anyway, even if the price was stable at 300 $/BTC or 3000 $/BTC.

How would you buy new hardware in 8-10 months? from what profit?

If each 1 TH/s rig makes only 1,2 $/day of profit, it may not be worth upgrading.  If it dies, another one like it can be bought cheaply from the miners who had to close shop.  There may not be enough demand to motivate the design of new ASICS.  If a substantially more efficient chip becomes available, a company with 1000 rigs may buy a couple of them per week.

[tss]

i blame karpeles and the buying bots.  prematurely raising prices and making everyone think bitcoin was going to $10k for no reason.  bitcoin is not expensive to mine for the asic manufacturers.  the equipment itself is worth very little and they sell it to us at a very high premium basing peak price numbers and our sucker greed of potential profits. lots of people lost money and confidence.  bitcoin should have been sub $100 until the next halving. 

[Fernandez]

The price reduction is good. It spreads out the coins and also forces to think of alternative systems.
Its dawning on the general holders that mining is promoted by a few groups with vested interests.

[johny08]

The bitcoin is preparing for the 0.1 W/GH miner machines arriving in the market in some months. Hahaha

[johny08]

The price reduction is good. It spreads out the coins and also forces to think of alternative systems.
Its dawning on the general holders that mining is promoted by a few groups with vested interests.

The problem is that you can't make big transaction with a small capitalization or trade amount.

Going down in the price to 140$ would be healthy and a rebound of this bear market.

[steelhouse]

Mining turned out to be a dumb idea.  We have about 10 mining pools that control over 75% of the network anyways.  You don't need a mining reward, the large owners of bitcoin will protect their interests.  Proof of stake without any stake reward is the future.

[johny08]

Mining turned out to be a dumb idea.  We have about 10 mining pools that control over 75% of the network anyways.  You don't need a mining reward, the large owners of bitcoin will protect their interests.  Proof of stake without any stake reward is the future.

Building up the blockchain can built value. So good that the bubble is bursting. over the next 5 years the reward will be decreased anyway.

[Criterion]

Well CEX.io has already suspended their cloud mining services because of the current drop in price.
http://dcmagnates.com/cex-io-suspending-cloud-mining-service-as-weak-bitcoin-prices-take-their-toll/
Miners are also facing a tough time.

[BaselessBitcoin]

If bitcoin price is falling that doesn't mean it is dying if there weren't any investors coming in that would mean it is dying. Mining farms being built is good for bitcoin, it means more capital is coming into the bitcoin economy.

[flipstyle]

If bitcoin price is falling that doesn't mean it is dying if there weren't any investors coming in that would mean it is dying. Mining farms being built is good for bitcoin, it means more capital is coming into the bitcoin economy.

The demand is falling, and selling pressure is far outgaining buying volume.  Companies can invest in bitcoin, but if they're merchants, it doesn't do anything to help.  Merchants themselves could give a damn about bitcoin in its premise...as all they do is cash out to fiat and dump it on the market the second they receive payment.   It's simply just another medium for them to ultimately receive fiat and maintain company cash flow...just like a credit card or paypal payment.

  Mining simply isn't profitable anymore, so there's the second problem.  If a lot of miners are forced to drop out the game, then it hurts the blockchain and flow of the technology.  But if there's no turnaround in price then there's no way around it, as majority of miners have to cover personal expense and equipment simply isn't cheap.

This is going to be a very vital and interesting time for bitcoin.  Halving rewards doesn't happen until next year, but the question is...will there be enough buying demand from new individual investors (not merchants) to keep the prices bouyant enough to survive until then?  I said it about 2 weeks back, but oftentimes technology only gets a certain window of time to 'make it or break it,' and I believe this is the time that will either make or break bitcoin for good due to public perception, which isn't easily changed for such a new speculative and vital market...especially if most of the news is negative.

[JorgeStolfi]

Merchants themselves could give a damn about bitcoin in its premise...as all they do is cash out to fiat and dump it on the market the second they receive payment.

They don't do that, actually.  When they sell a 100$ item 'paid with bitcoin', they just get 100 dollars in their bank account.  That is why it is so easy to convince them to 'accept bitcoin'.  It is the payment processor's job to handle the bitcoin and convert it to dollars. 

Bitpay and Coinbase must have been running into huge losses with the recent price drops: they must accept bitcoins as if they were worth the current market price, but can only sell them hours later on Bitstamp. 

[fox19891989]

as any bubble, Bitcoin is goin down. it's something normal.

Bitcoin is on since 5-6 years ago. Only 1 MIL users worldwide including China. This is a fact.

There are no newcomers and that's why the price is falling. It will fall much more when the big exchangers will start selling their Bitcoin.

[fox19891989]

as any bubble, Bitcoin is goin down. it's something normal.

Bitcoin is on since 5-6 years ago. Only 1 MIL users worldwide including China. This is a fact.

There are no newcomers and that's why the price is falling. It will fall much more when the big exchangers will start selling their Bitcoin.

The other reason: I guess maybe the future crashes BTC, because whales can make money from dump and short. They don't need make money from going up.

[theblacksquid]

First, miners, now merchant adoption? At this rate, every little action we take is gonna kill bitcoin.

How many times does it need to be restated that (Merchant Adoption != Falling Prices), Payment Proccessors dont sell their coins on the major exchanges, they sell them OTC where they could sell at a premium relative to the market price! Have you guys ever seen the listings for high-volume buyers? They would buy thousands at a time and not even flinch.