4 ms·

It's not the bitcoin volatility that has triggered this price drop (BC has been relatively stable recently), it's the fact that they were overpriced.

wpietri 13y ago
Oh, I'd call them correctly priced. During the gold rush, eggs were selling for the modern equivalent of $83 each. Cheese was $700 per pound. And this was paid by miners who were making the equivalent of a few hundred bucks per day. When crazy people want to give you a lot of money, you raise your prices. When they get over their madness, you can always lower them again.
- joosters 13y ago
  But the price is still too much. High prices, great. Higher prices than the potential reward, not great. It is like trying to sell those same eggs for more than the miners' daily wage. You need extra-crazy customers, not just plain crazy :)
  - wpietri 13y ago
    That's what happens in bubbles. Prices get higher than the rationally expected reward. Now that the bubble is popping a little, they are correctly dropping their prices. But I think it's fair to say that bubbles make crazy people extra-crazy, so maybe that's exactly what's going on.
- Osiris 13y ago
  Exactly, except that overnight the population of miners doubles so everyone is getting half the gold that they were just yesterday and they can no longer afford the $83 eggs, and the prices drop. The same thing is happening with mining hardware. Over the last two months, the difficulty has from 21m to 65m. My ASICs are generating 0.6 BTC per day versus 2 BTC / day in early July.
  - yebyen 13y ago
    Look at this sad, sad graph. It will get better when I rewrite my business plan to have something other than "Mine bitcoins" in it. https://www.beeminder.com/yebyenw/goals/christmas-bitcoins https://www.beeminder.com/yebyenw/goals/christmas-bitcoins I cashed in 22BTC in January to buy two BFL Jalapenos. I paid an extra $100 each just last week to get the 2GH/s bonuses added, because I knew they'd be shipping soon. They just arrived with one bad power cord, I'm starting to recoup my losses now. It's going to take some mental anguish to get myself over the idea that "I'll never have that much disposable money again, at least not in five more years of saving." The calculator says I can still mine $512 in 43 days, but I'm skeptical it will be more like 75 or 120 days, given the pace of the various difficulty graphs that I've seen.
    - mahyarm 13y ago
      That is why you put a hard percentage cap of assets on any speculative ventures.
      - yebyen 13y ago
        You don't understand at all. I've never invested more than $50USD in any bitcoin schemes, and I've cashed out of them all without loss. That 22BTC was what I generated and earned myself mining. At the time it was worth no more than $12/BTC. I spent it on more mining equipment. It's really true what they say, sell shovels.
        yebyen 13y ago
        Or maybe you understand in spite of the fact that there aren't any USD involved. Buying a new miner is a risky venture. Even in the face of the coming obsolescence of my existing (working) mining rig. Whether you use bitcoins or USD to do it.
        mahyarm 13y ago
        You said "I'll never have that much disposable money again, at least not in five more years of saving." I thought you poured a lot of your money into buying miners, and the return you though you would get was different the return you'll be actually getting.

wpietri 13y ago

Oh, I'd call them correctly priced. During the gold rush, eggs were selling for the modern equivalent of $83 each. Cheese was $700 per pound. And this was paid by miners who were making the equivalent of a few hundred bucks per day. When crazy people want to give you a lot of money, you raise your prices. When they get over their madness, you can always lower them again.

joosters 13y ago
But the price is still too much. High prices, great. Higher prices than the potential reward, not great. It is like trying to sell those same eggs for more than the miners' daily wage. You need extra-crazy customers, not just plain crazy :)
- wpietri 13y ago
  That's what happens in bubbles. Prices get higher than the rationally expected reward. Now that the bubble is popping a little, they are correctly dropping their prices. But I think it's fair to say that bubbles make crazy people extra-crazy, so maybe that's exactly what's going on.
Osiris 13y ago
Exactly, except that overnight the population of miners doubles so everyone is getting half the gold that they were just yesterday and they can no longer afford the $83 eggs, and the prices drop. The same thing is happening with mining hardware. Over the last two months, the difficulty has from 21m to 65m. My ASICs are generating 0.6 BTC per day versus 2 BTC / day in early July.
- yebyen 13y ago
  Look at this sad, sad graph. It will get better when I rewrite my business plan to have something other than "Mine bitcoins" in it. https://www.beeminder.com/yebyenw/goals/christmas-bitcoins https://www.beeminder.com/yebyenw/goals/christmas-bitcoins I cashed in 22BTC in January to buy two BFL Jalapenos. I paid an extra $100 each just last week to get the 2GH/s bonuses added, because I knew they'd be shipping soon. They just arrived with one bad power cord, I'm starting to recoup my losses now. It's going to take some mental anguish to get myself over the idea that "I'll never have that much disposable money again, at least not in five more years of saving." The calculator says I can still mine $512 in 43 days, but I'm skeptical it will be more like 75 or 120 days, given the pace of the various difficulty graphs that I've seen.
  - mahyarm 13y ago
    That is why you put a hard percentage cap of assets on any speculative ventures.
    - yebyen 13y ago
      You don't understand at all. I've never invested more than $50USD in any bitcoin schemes, and I've cashed out of them all without loss. That 22BTC was what I generated and earned myself mining. At the time it was worth no more than $12/BTC. I spent it on more mining equipment. It's really true what they say, sell shovels.
      - yebyen 13y ago
        Or maybe you understand in spite of the fact that there aren't any USD involved. Buying a new miner is a risky venture. Even in the face of the coming obsolescence of my existing (working) mining rig. Whether you use bitcoins or USD to do it.
      - mahyarm 13y ago
        You said "I'll never have that much disposable money again, at least not in five more years of saving." I thought you poured a lot of your money into buying miners, and the return you though you would get was different the return you'll be actually getting.