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>Mining difficulty does not push the price up, it's the other way round. Mining difficulty has little effect on the price. Halvings which the poster was talkin

by Tenoke 6y ago

>Mining difficulty does not push the price up, it's the other way round. Mining difficulty has little effect on the price. Halvings which the poster was talking about, however, also does not push the price up but rather reduces the rate of inflation.

mavhc 6y ago
The actual cost of making a bitcoin is the cost of power, if the amount of power per bitcoin goes up, then the price will go up. The speculative price of bitcoins is ahead of the actual cost because it's very very likely to go up in the future as it becomes even more expensive to mine.
- Nursie 6y ago
  You have it precisely backwards. If the price goes up then it becomes more profitable to mine, so it becomes viable to use more power. There is no mechanism by which the cost of mining affects the price.
  - mavhc 6y ago
    If the cost of mining is higher than the price, then people won't mine, and the cost will go down. They're the same thing in the end, as long as you don't account for people paying more to get bitcoins now because they know they'll be more expensive in the future. So in the end the price of a bitcoin (not accounting for the future), will be exactly the cost of electricity to mine it. Once you account for the future however you realise if you buy now you're getting them cheap, which pushes up the price, and thus causes it to be more profitable to mine, which pushes up the cost of mining, which causes it to be less profitable to mine. The entire thing was designed by someone who took 1 economics class and thought inflation was a bad thing, so designed in multiple types of deflation, thus making it useless as a currency (who would ever sell a bitcoin?), and bring about the apocalypse faster
    - Tenoke 6y ago
      >If the cost of mining is higher than the price, then people won't mine, and the cost will go down. People will roughly decrease mining up to the new cost. That doesn't lower the cost further. If a mining pool explodes, decreasing the total power going into mining the price will not be affected. The causality is fully from price>mining output, and there's no mechanism for the opposite since mining produces the same # of coins regardless of the amount of energy put in.
    - Nursie 6y ago
      > If the cost of mining is higher than the price, then people won't mine, and the cost will go down. Absolutely, the price of BTC drives the viability of mining, BUT the cost of mining doesn't have the reverse effect, it doesn't affect market price. And yes, I agree, the whole thing is a clusterfuck :)

by Tenoke 6y ago

mavhc 6y ago

The actual cost of making a bitcoin is the cost of power, if the amount of power per bitcoin goes up, then the price will go up. The speculative price of bitcoins is ahead of the actual cost because it's very very likely to go up in the future as it becomes even more expensive to mine.

Nursie 6y ago
You have it precisely backwards. If the price goes up then it becomes more profitable to mine, so it becomes viable to use more power. There is no mechanism by which the cost of mining affects the price.
- mavhc 6y ago
  If the cost of mining is higher than the price, then people won't mine, and the cost will go down. They're the same thing in the end, as long as you don't account for people paying more to get bitcoins now because they know they'll be more expensive in the future. So in the end the price of a bitcoin (not accounting for the future), will be exactly the cost of electricity to mine it. Once you account for the future however you realise if you buy now you're getting them cheap, which pushes up the price, and thus causes it to be more profitable to mine, which pushes up the cost of mining, which causes it to be less profitable to mine. The entire thing was designed by someone who took 1 economics class and thought inflation was a bad thing, so designed in multiple types of deflation, thus making it useless as a currency (who would ever sell a bitcoin?), and bring about the apocalypse faster
  - Tenoke 6y ago
    >If the cost of mining is higher than the price, then people won't mine, and the cost will go down. People will roughly decrease mining up to the new cost. That doesn't lower the cost further. If a mining pool explodes, decreasing the total power going into mining the price will not be affected. The causality is fully from price>mining output, and there's no mechanism for the opposite since mining produces the same # of coins regardless of the amount of energy put in.
  - Nursie 6y ago
    > If the cost of mining is higher than the price, then people won't mine, and the cost will go down. Absolutely, the price of BTC drives the viability of mining, BUT the cost of mining doesn't have the reverse effect, it doesn't affect market price. And yes, I agree, the whole thing is a clusterfuck :)