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I think the point is that mining is subsidized by "printing" new bitcoins, which currently make up most of the block reward. Speculation is in theory not a fac

by tveita 12y ago

I think the point is that mining is subsidized by "printing" new bitcoins, which currently make up most of the block reward. Speculation is in theory not a factor, since spending $ on buying a bitcoin == spending $ on mining a bitcoin, so the price would be the same, if a rational market existed.

yebyen 12y ago
You say this like it's not a thing... "if a rational market existed." Maybe we're experiencing a breakdown of understanding because your intent isn't clear, so forgive me if I've misinterpreted your sentiment. Isn't the market mostly rational? Where is your evidence that it does not exist/that the price is not rational? To me it has the appearance that the price of bitcoin hovers around the cost of mining bitcoin, ever since the big rising bubble first popped. I am not an expert but I have been following for quite some time as mining hardware gets more efficient and the difficulty waggles mostly trending up over time. There is no universal "electricity cost to mine a bitcoin" since mining hardware varies in efficiency, and it's true that any rational miner would stop mining if his hardware could no longer make a marginal profit on the cost of the electricity. You would get more bitcoin by just spending that part of your utility budget at an exchange. I have obsolete ASIC hardware from BFL that I only run because I have a source of free electricity and for the novelty / because it's cold. They made money for a time, and then the market corrected. With the advances in hardware that are constantly coming from many different players in the mining hardware market, I would not be surprised to hear that many latest-gen ASIC miners are still hovering around "break-even" electricity cost to mine, and as the difficulty continues to rise, anyone waiting for delivery of their equipment goes on biting their nails, waiting to see if they will make a profit or if all their effort will have been wasted.

by tveita 12y ago

yebyen 12y ago

You say this like it's not a thing... "if a rational market existed." Maybe we're experiencing a breakdown of understanding because your intent isn't clear, so forgive me if I've misinterpreted your sentiment. Isn't the market mostly rational? Where is your evidence that it does not exist/that the price is not rational? To me it has the appearance that the price of bitcoin hovers around the cost of mining bitcoin, ever since the big rising bubble first popped. I am not an expert but I have been following for quite some time as mining hardware gets more efficient and the difficulty waggles mostly trending up over time. There is no universal "electricity cost to mine a bitcoin" since mining hardware varies in efficiency, and it's true that any rational miner would stop mining if his hardware could no longer make a marginal profit on the cost of the electricity. You would get more bitcoin by just spending that part of your utility budget at an exchange. I have obsolete ASIC hardware from BFL that I only run because I have a source of free electricity and for the novelty / because it's cold. They made money for a time, and then the market corrected. With the advances in hardware that are constantly coming from many different players in the mining hardware market, I would not be surprised to hear that many latest-gen ASIC miners are still hovering around "break-even" electricity cost to mine, and as the difficulty continues to rise, anyone waiting for delivery of their equipment goes on biting their nails, waiting to see if they will make a profit or if all their effort will have been wasted.