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> But its energy consumption is only bounded by the perception of its future value. Hash rate growth is fueled by speculation in continued growth in the bitcoin

by runeks 9y ago

> But its energy consumption is only bounded by the perception of its future value. Hash rate growth is fueled by speculation in continued growth in the bitcoin exchange rate. How do you figure? Miners mine bitcoins and sell them at the current exchange rate -- not a future one. Mining to speculate on future price increases make no sense. If you believe the price will rise, just buy bitcoins now (no reason to mine them at a loss).

raiflip 9y ago
I think he pins it to future price instead of current price because of the time lag between the decision to mine for bitcoin and the time you actually get the coin. If you think bitcoin is going to crash by the time you start making a profit then even if it is worth a lot now you're not going to mine.
nhaehnle 9y ago
Are miners actually selling all earned bitcoins immediately? If so, that means there must be at least 20 million USD "entering" Bitcoin every day in net terms. That seems like a lot, certainly much more than could be supported by actual economic activities in Bitcoin (including illegal ones). How many people are there who are willing to use, say, 10k USD of their own money for gambling? How many greater fools? Then again, some of those "greater fools" could be people holding Bitcoin that they collected from ICOs, so who knows. As they say, the really tricky part of attempting to profit from the bursting of bubbles is the timing.
- killjoywashere 9y ago
  20M USD/d * 365 ~ 7B USD. I suspect people are trying to evacuate north of 1T USD from China alone. This will go on for years.
jlarocco 9y ago
A potential bitcoin miner has to decide whether it's worth buying the equipment in the first place, and then later they have to decide whether it's worth it to upgrade. Before they actually start mining they're speculating that the future value will cover the up front equipment cost, on going electricity costs, and all of that. IMO, the interesting number isn't the cost of mining or the value of the bitcoins in dollars, but the value of goods and services being bought directly with bitcoin. If everybody treats it as an investment and never spends it, or immediately cashes out, then isn't it essentially just a big ponzi scheme?

by runeks 9y ago

raiflip 9y ago

I think he pins it to future price instead of current price because of the time lag between the decision to mine for bitcoin and the time you actually get the coin. If you think bitcoin is going to crash by the time you start making a profit then even if it is worth a lot now you're not going to mine.

nhaehnle 9y ago

Are miners actually selling all earned bitcoins immediately? If so, that means there must be at least 20 million USD "entering" Bitcoin every day in net terms. That seems like a lot, certainly much more than could be supported by actual economic activities in Bitcoin (including illegal ones). How many people are there who are willing to use, say, 10k USD of their own money for gambling? How many greater fools? Then again, some of those "greater fools" could be people holding Bitcoin that they collected from ICOs, so who knows. As they say, the really tricky part of attempting to profit from the bursting of bubbles is the timing.

killjoywashere 9y ago
20M USD/d * 365 ~ 7B USD. I suspect people are trying to evacuate north of 1T USD from China alone. This will go on for years.

jlarocco 9y ago

A potential bitcoin miner has to decide whether it's worth buying the equipment in the first place, and then later they have to decide whether it's worth it to upgrade. Before they actually start mining they're speculating that the future value will cover the up front equipment cost, on going electricity costs, and all of that. IMO, the interesting number isn't the cost of mining or the value of the bitcoins in dollars, but the value of goods and services being bought directly with bitcoin. If everybody treats it as an investment and never spends it, or immediately cashes out, then isn't it essentially just a big ponzi scheme?