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Bitcoin value plummets as mining is no longer profitable

By Shawn Knight
Jan 15, 2015
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  1. What goes up, must come down... or at least that appears to be the mantra behind Bitcoin. After enjoying a meteoric rise to fame (and fortune, for some), the controversial cryptocurrency has taken a steep nosedive - especially as of...

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  2. dividebyzero

    dividebyzero trainee n00b Posts: 4,891   +1,258

    So if those inside-job Bitcoin thieves are discovered will the charges be reduced to petty larceny?
     
    gardnerra likes this.
  3. Puiu

    Puiu TS Evangelist Posts: 1,902   +528

    There is no legislation that punishes something like this. Right now bitcoins are treated like virtual goods and the value is set by those who trade them. (supply and demand)
     
  4. dividebyzero

    dividebyzero trainee n00b Posts: 4,891   +1,258

    Well, so much for that attempt at humour.
    R.I.P.
     
  5. captaincranky

    captaincranky TechSpot Addict Posts: 11,691   +1,879

    Aw, did poor bitcoin fall down and go boom? :oops:

    Oh well, I didn't feel like abandoning my IGP platforms fer a proper 'lectric wastin' minin' rig anyhoo.
     
  6. gamoniac

    gamoniac TS Addict Posts: 293   +69

    I thought as Bitcoins are getting harder to mine (supply goes down), the value would go up? I wouldn't think miners cashing in their Bitcoins would be enough to drive the prices down THAT much, especially if its popularity is higher than ever as reported in this article. There must be other explanations.
     
  7. cliffordcooley

    cliffordcooley TS Guardian Fighter Posts: 8,551   +2,894

    Possibly everyone coming to their senses!
     
    gamoniac likes this.
  8. captaincranky

    captaincranky TechSpot Addict Posts: 11,691   +1,879

    How about, "they were never worth anything in the first place?
     
    gamoniac likes this.
  9. CrisisDog

    CrisisDog TS Booster Posts: 120   +17

    I still don't get all the hype behind this.
     
  10. I bought 20 bitcoins for around $10 before they "boomed" just to have a few. I'm glad I forgot about them, because as soon as I saw them over $1000, I sold them all and made about $18,000 in real money.

    Everything in currency is BS, this is just a new flavor not controlled by the usual suspects so they use the media to discourage it. Apparently it works. Glad I ignored the "You're wasting your money" geniuses then.
     
  11. davislane1

    davislane1 TS Evangelist Posts: 3,543   +2,339

    The decline in Bitcoin's value has nothing to do with their actual worth or merit as a currency. When a market has a parabolic run up, it usually declines as seen here. No one has "come to their senses." People who were in a position to sell merely sold.
     
  12. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 2,750   +1,105

    I don't think it's harder to mine them, I think it's not profitable to mine them now that the price has gone down. You need expensive equipment to mine them, and when they're worth $400 each, you make nice money every time you mine one, but if they're worth $5 each, then it's not worth it.

    Apparently that breakeven point between profit and loss has just been crossed because of the fall in value. This same sort of thing exists with oil right now too.... with oil at $48/barrel, it's not profitable to invest in new fracking sites... eventually this will cause supply to shrink and the price of oil will go back up to where it's profitable to increase supply again.
     
  13. If "store of value" is considered an important part of a currency, then yes this drop undermines its legitimacy and use as a currency.

    Most currencies, in most developed countries, during most centuries, aren't something you put in a box and wake up six months later to discover vastly reduced (or increased) buying power. Are there occasional examples? Sure. But Bitcoin's price swings haven't been occasional.
     
  14. captaincranky

    captaincranky TechSpot Addict Posts: 11,691   +1,879

    No, it worked for you. There's quite a big difference between that, and working for everyone who invested in them. In your case, it's the same as if you had started a pyramid scheme. Dinner's on you, tonight?
     
    gamoniac likes this.
  15. davislane1

    davislane1 TS Evangelist Posts: 3,543   +2,339

    You might want to take a refresher on pyramid schemes. What he did was no different than what occurs in any other market. Unless you're under the impression that when an investor realizes a capital gain, no one is on the other side of that trade.
     
  16. p51d007

    p51d007 TS Evangelist Posts: 909   +385

    Unless it comes out of the ground, is a "precious" metal, it's all just paper.
     
  17. captaincranky

    captaincranky TechSpot Addict Posts: 11,691   +1,879

    Actually I don't really need a refresher course on anything.

    If Bitcoin is "a market", then it should be "traded" as such.

    I know you believe that many stocks are "phantom commodities", but the reality is, at least all that aren't overt fraud, sell at minimum, a service. For example, an insurance company isn't a commodity, not does it manufacture anything. It produces an intangible item, that doesn't exist until it's needed. In fact, this "non- extant entity", still serves a purpose in allowing people to register their cars in states that require it.

    Now, is bitcoin a currency a currency, or a commodity?

    If you're trying to pass this garbage off as a currency, then it should have some sort of reasonable stability. If a bitcoin is worth a dollar today, it should be worth at or near a dollar tomorrow.

    In my 60+ years of being here, the only "currencies" anywhere near this unstable, are those printed during some crap house "coup", by a "junta", during some revolution in a 3rd world country.
     
  18. davislane1

    davislane1 TS Evangelist Posts: 3,543   +2,339

    It is and it is. Or do you mean to suggest the existence of willing buyers and sellers of a good doesn't constitute a market, and that the transactions between those two parties doesn't constitute trade?

    Currency isn't defined by the stability of its purchasing power. A currency is simply a designated medium of exchange. Bitcoin is a designated medium of exchange. Therefore, Bitcoin is a currency.

    Bitcoin is a high-risk asset. You'll get no objection from me there. But the level of denial and hopeless optimism that characterizes Bitcoin threads across the Web is more than a little silly: On one hand, you have people trying to claim that Bitcoin isn't what it demonstrably is. On the other, you have people trying to claim that Bitcoin is the currency of the future. It reminds me of the folks who populate financial news forums and give a thousand reasons why asset X can't (or won't) go to price Y. Everybody has their reasons, and everyone misses the real point.
     
  19. I could use bitcoin as virtual toilet paper to wipe my virtual butt.
     
  20. captaincranky

    captaincranky TechSpot Addict Posts: 11,691   +1,879

    Well yes, a viable currency should be reasonably stable. It will reflect changes in other more volitile markets with it's buying power. A prime example of this is the price of gasoline. The US dollar hasn't changed substantially in value, it just buys a lot more gasoline today than a month ago.

    As far as bit coin goes, it can't even be a scam business, as most scams need a temporary office to launch the fraud from.

    Then we have bitcoin. Where did it come from? Who created it? Was this some grand largesse from some financial genuis, with no hope or need from gain or benefit from its creation? Hey, maybe God put this crap on our public servers. Maybe he, (or She, or Shim), was waxing nostalgia for the days of the gold rush.

    Why didn't these poor affected bitcoin miners turn their efforts toward, "litecoin", or some other crap-maginary string of XXX'es and OOO's.
     
  21. My understanding is that Bitcoins are DESIGNED to get harder to mine over time. That is why miners were forced to continually apply more and more hardware to the challenge.
     
  22. umbala

    umbala TS Addict Posts: 169   +145

    All this rambling is good and fine, but you're missing one important fact. You seem to be treating bitcoin as any other well established currency that has existed for hundreds of years. The so called "crypto-currency" era is still very much in its infancy. It could take up to a decade or longer for bitcon's value to stabilize. Right now it seems to be just a small number of people sitting o big piles of it, all waiting for the right time to cash out. Looks like some of them pulled the trigger and it's having a domino effect. I think the value will bottom out and then start going back up and then down again like a roller coaster, but each time the crests become smaller.
     
  23. captaincranky

    captaincranky TechSpot Addict Posts: 11,691   +1,879

    OK please, stop trying to bracket what I say, with your opinions.

    A currency, or any currency which people expect to be able to spend on a day to day basis, needs to have a reasonably stable exchange rate.

    In other words, I shouldn't have to pay one bitcoin for a pack of smokes today, and then have to pay five bitcoins for the same pack of smokes tomorrow.

    Now, I've come to that conclusion using common sense. Skip all the prattling about what this bitcrap might become, or why it isn't that way today.

    Speaking of which, suppose I want to buy a carton of smokes or a gallon of milk? Should I wait 5 or ten years for the value of bitcoin to stabilize?

    So, people want "money", or, "currency", call it what you will, to be able to buy things today, not at some point in the future.

    If you're on board with crapto-coinage fine. Just make sure you "put your bitcoin where your IRA is", and we'll talk about it later. Much later.
     
    cliffordcooley likes this.
  24. cr1ceo

    cr1ceo TS Rookie

    Bitcoin is trying to create a market where there is no need for one . My credit cards and bank accounts work just fine as so do other peoples.
     
  25. pioruns

    pioruns TS Rookie Posts: 22

    There are people in this world who cannot have bank account, or who want to send money to other end of the world instantly. Your bank cannot do that, neither mine. That's where bitcoin stepping in.
     

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