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Ok, this is completely silly. No miners have the luxury of the price dropping, as it could make all of them insolvent. They depend on Bitcoin's exchange rate in

Ok, this is completely silly. No miners have the luxury of the price dropping, as it could make all of them insolvent. They depend on Bitcoin's exchange rate increasing so that the revenue generated from the block reward exceeds the cost of electricity to run the miners. They're not working large enough profit margins to take such risks. It's non-workable anyway. If any miner has to drop out of the race, they still have an inventory of mining equipment to auction off. The highest bidder is simply going to put that equipment to reuse immediately, so there will be no meaningful reduction in overall hash rate. Any miner who attempted to cause the price of bitcoin to slump has simply shot themselves in the foot. If the dollar cost of Bitcoin does not continue to increase sufficiently over time, Bitcoin is dead and every businessman who took out loans to buy mining equipment is going to default.

shiado 7y ago
Long term large scale miners with massive reserves of BTC (you could literally get 50BTC for ten minutes of CPU mining on your laptop when BTC started) can crash the price on a whim with a small percentage of their reserves due to the lack of volume in the BTC market in combination with the liquidations from ridiculous amounts of leverage people are using in crypto (binance and bitmex are >100x to unqualified investors) which causes accelerated declines when the price drops even slightly. They can use this as a short term strategy to force miners with less profitable operations (higher electricity costs, worse equipment) to liquidate their coins at a lower price and cease mining temporarily allowing the more profitable miners to enjoy less competition and the ability to buy the coins at a reduced price. Even if the operation starts up again after the market pumps the superior miner has increased their proportion of coins allowing them to swing the market even greater, and sell coins to get better equipment (the newest bitmain miners), and the bagholders who bought the worse equipment or have more expensive electricity naively set themselves up for failure. The entire crypto space relies on long term pumping and dumping as well as short term "barting" to liquidate leveraged traders. I didn't even mention bitmain patent fuckery and the likely collusion of key players with the BTC devs to purposely not scale BTC to increase transaction fees which benefits miners. The whole thing is a disgusting mess and I don't touch it anymore. Do not fuck with cryptocurrency. It is entirely bought and paid for.

shiado 7y ago

Long term large scale miners with massive reserves of BTC (you could literally get 50BTC for ten minutes of CPU mining on your laptop when BTC started) can crash the price on a whim with a small percentage of their reserves due to the lack of volume in the BTC market in combination with the liquidations from ridiculous amounts of leverage people are using in crypto (binance and bitmex are >100x to unqualified investors) which causes accelerated declines when the price drops even slightly. They can use this as a short term strategy to force miners with less profitable operations (higher electricity costs, worse equipment) to liquidate their coins at a lower price and cease mining temporarily allowing the more profitable miners to enjoy less competition and the ability to buy the coins at a reduced price. Even if the operation starts up again after the market pumps the superior miner has increased their proportion of coins allowing them to swing the market even greater, and sell coins to get better equipment (the newest bitmain miners), and the bagholders who bought the worse equipment or have more expensive electricity naively set themselves up for failure. The entire crypto space relies on long term pumping and dumping as well as short term "barting" to liquidate leveraged traders. I didn't even mention bitmain patent fuckery and the likely collusion of key players with the BTC devs to purposely not scale BTC to increase transaction fees which benefits miners. The whole thing is a disgusting mess and I don't touch it anymore. Do not fuck with cryptocurrency. It is entirely bought and paid for.