well, this has all already been debated ad nauseam, so let me try to make a somewhat different claim that might be novel:

there's little evidence that any advice to buy or sell ever posted in this forum has influenced the short-term price of bitcoins.

maybe that should suggest that people stop wasting their time trying ineffectively to manipulate the market - on both sides, of course!

Correlation != causation. Difficulty jumped what, 60% last time, yet we're at lower prices than we were last period. Why aren't miners holding onto their coins until prices increase?

I'll answer you: because miners don't get to set the fuckin' price.


Relax. I'm not being elitist, I'm merely pointing out that most kids in dorm rooms don't typically pay directly for utility bills - in their mind the electricity is "free". If they already put together the box with part of their student loan money or grant money, then in their mind they have no "costs" involved and therefore they will always mine cheaper than you or I will.

So you aren't going to have any collusion between miners to not sell their BTC below a certain threshold, and even if you did - as I said, newly minted Bitcoins make up a tiny fraction of the BTC that change hands each day, so the effect on the market would be negligible.

You can point out the trend all you like, but betting the farm on the fact that the price is going to follow difficulty to the sky is a fool's bet.

Keep telling yourself that your simple supply/demand calculations are going to prove that price will follow difficulty, and that people who are newly investing in Bitcoin will pay whatever the miners demand.

You'd do well to note that the first price slump of the last month or so was simply caused by an early adopter cashing out (no hacking, no sudden media attention or scrutiny, and no misunderstandings of the tech) - again, someone will always mine cheaper than you or I.

Miners don't get to set the price - the price is what people are willing to buy them for.

There are a lot of factors in play, yes, but we need to keep in mind that there's no direct pull on a BTC buyer to pay more because Joe Miner only makes 2 BTC/day today, whereas he made 4 BTC/day last week.

The SAME NUMBER OF BITCOINS are produced every week, regardless of how many miners participate in the bounty.

Print that out, put it on your wall. It cuts to the essence of this "difficulty" controversy.

Move miners from the supply side to the demand side to suit your hypothesis... brilliant!

This type of shit is the reason certain people laugh when you mention Bitcoins.

Regardless of the other arguments going on, I just have contention with you saying that bitcoins are a finite resource when you really mean that production is finite and predictable. Well, mostly so, at least, as rapid growth can make the 1 block/10 minutes target quite a bit shorter.

In other words, staying with the bounds of your argument, there would need to be an increase in miners equivalent to the creation of new bitcoins just to maintain the same level of demand.

Of course then we can argue that more miners means more network power, which means higher difficulty, which might or might not cause or be caused by increasing exchange value, which brings in new non-mining investors, which kills the duck that ate the bug that stung the man which built the home which houses the family that murdered each other in cold blood after one too many nursery rhymes.

Fixed it for you



This image represents why it's funny to see people arguing about it.

you're simply assuming your conclusion. the very proposition in dispute is that the step from 'higher difficulty' to 'value increases' reflects a causal process.

there is very little reason to think that a causal process exists for that particular step. of course, it is impossible to rule it out in practice, because it could reflect a complex psychological or economic phenomenon. that is why i say it requires empirical support. but it has no theoretical support.

without any empirical grounding, all people are doing is offering entirely unjustified conjecture for that step in your 'cycle'. by contrast, more than base conjecture is available for the other steps of the cycle, for it makes perfect sense that more resources will be devoted to mining if it is more profitable for people to do so.

this is, as asdf has said, extremely obvious. it is a trivial analysis. that the confusion persists is baffling.

Let them sell. Right now we are rounding up all the sheep and sending them to slaughter.

Their loss is my gain.

You say chicken, I say egg.

The reason I generally don't take sides in the argument "Does difficulty drive price, or does price drive difficulty?" is because I think it's both.

That's why I find it funny to see people so adamant that their view is 'correct' and the opposition's 'incorrect'.