Bitcoins/Cryptocurrency

masonic

ExremelyCautiousSocialist wrote: »

Well price is 1 form of validation and Bitcoin is a good thing imo. Practically a higher price = higher hash rate.

The hash rate is currently at an all time high. Yet the price isn't (it's still 44% below the last high). When the price was at an all time high (close to $20k) in mid-December 2016, the hash rate was the same as it was in March this year, when the price was below $4k.

So even practically, the hash rate and price are independent. The reasons for this are manifold, but a key reason is that the block rate is limited by the hash difficulty, which in turn is a function of the hash rate. While the price is a function of the inflows and outflows of fiat currency.

In other words, the algorithm elegantly normalises the amount of effort put into mining so as to constrain the reward, whereas nothing constrains the human tendency to take a gamble, given certain price movements, news flow, market manipulation etc.

Edit: as a corollary of the above, it is actually the energy required to sustain the network, not the hash rate, that is linked to the price of bitcoin. As such, all of you who are pinning your hopes and dreams on the price spiralling ever higher should be ashamed of yourselves for wishing to destroy the planet

ExremelyCautiousSocialist

masonic wrote: »

the hash rate and price are independent.

Indirect link. Price goes up, better mining equip developed, more miners switch on to mine. Price goes down miners switch off.

masonic

ExremelyCautiousSocialist wrote: »

Indirect link. Price goes up, better mining equip developed, more miners switch on to mine. Price goes down miners switch off.

Clearly I'm not going to get through to you using words, so let's try to look at this in charts:

https://charts.bitcoin.com/btc/chart/hash-rate#5moc


https://www.coingecko.com/en/coins/bitcoin

Now, does it look as though when the price goes up the hash rate goes up and vice versa? What happened during 2018?

ExremelyCautiousSocialist

I see LAG.

masonic

ExremelyCautiousSocialist wrote: »

I see LAG.

This would suggest that it takes about 6 months for miners to be brought online in response to price movements. Or that miners didn't notice the price of bitcoin crash in early 2018, and so they kept switching on more and more miners during the course of 2018 even though the bitcoin price fell from near $20k to around $4k.

Or perhaps the hash rate is dependent on other things, the price of bitcoin playing only a minor part.

ExremelyCautiousSocialist

masonic wrote: »

This would suggest that it takes about 6 months for miners to be brought online in response to price movements. Or that miners didn't notice the price of bitcoin crash in early 2018, and so they kept switching on more and more miners during the course of 2018 even though the bitcoin price fell from near $20k to around $4k.

Or perhaps the hash rate is dependent on other things, the price of bitcoin playing only a minor part.

$20k was too soon in 2017, miners still making good profit in 2018 until we started to get low on price. Look at the price lows in dec 2018 match the miner chart dip. Then the 2019 price recovery chart shows a miner recovery same time.



The strength of the correlation i dont care enough to look further right now.

masonic

ExremelyCautiousSocialist wrote: »

$20k was too soon in 2017, miners still making good profit in 2018 until we started to get low on price. Look at the price lows in dec 2018 match the miner chart dip. Then the 2019 price recovery chart shows a miner recovery same time.

So no lag on that occasion, although you say there was one before. Or perhaps you contend that this trend you assert exists has only emerged in the last 6 months.

To look at it another way, miners didn't care about the price falling from $20k to $6k - in fact it just made them work harder, but from $6k to $4k? Totally different!

The strength of the correlation i dont care enough to look further right now.

For someone who asserted "Practically a higher price = higher hash rate", I'm surprised you don't care enough to look into whether that statement is actually true. It certainly isn't true as written, if you look back further than 6 months. Those 6 months where there is a correlation would therefore most likely be coincidence.

ExremelyCautiousSocialist

masonic wrote: »

So no lag on that occasion, although you say there was one before.

Attain mining set up = lag. Turn miner back on = no lag.

masonic

ExremelyCautiousSocialist wrote: »

Attain mining set up = lag. Turn miner back on = no lag.

It doesn't take 6 months to set up a mining rig, so the first part of that explanation makes no sense.

As for the second part, the recent dip in hash rate started in October 2018 and started going back up in December 2018. Why would you turn off your miner in October when BTC was about $6,500 and turn it back on between December 2018 and April 2019 when BTC was about $4,000?

ExremelyCautiousSocialist

Point still stands. Bye.