I agree that in theory it should be like that, eventually even hoping that it would be like that, but in practice it’s not like that in my opinion.
Best example is the BTC, electricity cost is raising daily, but its price isn’t. All altcoins are somehow bound to the BTC trend, unluckly of course, but that’s how it is in practice right now.
Your price/electricity calculation does fit even less with POS coins, or even hybrid coins.
I personally think the calculation is a bit more difficult to make even to get somehow a factor that influences the price a bit with electricity, but it isn’t the pure electricity usage, but more the network itself including the network security. Now the argument could be that this is again based on electricity, but it’s not necessary as more and more efficient machines could handle the same network job than current machines.
There are more arguments in my opinion which oppose the pure electricity usage as a price maker.
Just some examples:
Dash, hybrid POW/POS: Following the electricity logic POS would lower the price. But that’s against all the price pure POS coins have (about 1/2 of the top 20 coins are POS!).
ERC20 tokens, all these should have no value as the value of POW mining and electricity usage is added allready to ETH. The other scenario would be that all ERC20 tokens lower ETH’s value, meaning the more ERC20 tokens are around, the less ETH would have own value.
I even can’t see any logic that value from electricity usage would be different in bull or bearish markets, either it got/has value from it or it doesn’t. It can’t be applied just here and there for a limited time.
And i agree with the argument that a big investor has no idea who when where it’s mined. It’s just logical. Just because we, the small miners, know a lot of these details is because we MUST know it to successfull mine. For investors this is of little to no value at all. No investor cares if a coin is mined with a GTX 1070 or a Baikal Asic, even less how much power and electricity is needed for these. There are other way more important factors like liquidity, network security and whatever not that are of way more interest for these.
Of course that’s just my opinion and it could be flawed as well.
Actually no it isn’t proof. Go watch CryptoTradersTV on Twitch or CWN and you will start to see that the actual traders could care less what you the miner spends to create work. They are only looking at market sentiment, patterns, and making calculated bets based on what the chart is doing. They don’t care about anything else really. Price resistance to going below 6k is nothing more than resistance to a previous support line, and that support line has been respected multiple times (one instance where it dipped below). That’s market sentiment, people “believe” bitcoin is worth at least 6k, if not more, and start buying back in when it approaches that price, which drives it back up again. A quick and dirty chart (ignore the blue lines arrows that’s for something else I was looking at). Yellow line is about 6k give or take a couple dollars. See how price refuses to drop below it? I promise you one thing, the folks buying and selling, have no idea what it cost you to create the coin, nor do they want to know.
May be, but the 1800 new BTC issued ever day are mined by people who will not sell at a loss.
I agree that market reaction might seem like traders would care less about the cost to make a coin, but a good trader does put this information into weight and it is something a real professional would consider.
Actually no. They can profit both ways whether it’s gaining or losing, and a good trader plays both sides of the trend. Serious traders tend to use exchanges like Bitmex where they can go long and short on BTC. Yes I know Bitmex isn’t technically an option for US customers (but they do it anyways). Only a miner sees a dropping price as a loss. A trader will bet against the coin (go short) and take profits on that bet along the way. It’s interesting to watch, and sickening as a miner, to watch seasoned traders make 600% on a short (betting it will continue to lose). Miners hold coins in a down market, hoping it will come back up. Traders care less and just go short if the chart and their indicators say it will continue to drop. That’s the difference between the miner and trader perspective. Miners can only profit when the coin is worth more than their costs. Traders can profit (if they are good) no matter what happens.
Which is why I say, traders don’t really know what goes into mining a “coin”, they only focus on market sentiment and what the charts and tools suggest will be the next move. They don’t know about miner “x”, what prices does to his/her profitability, and they don’t particularly care all that much. It’s outside their scope of interest and isn’t necessary for them to make a trade.
Moordrik allready said it and i have the same opinion, even from my own experience. I make the best trades with price drops and not when it raises and i’am even no way a real professional trader, so what’s left for these.
I even would compare it to real life trading with oil, gold, whatever. I have no doubt that none of the traders have an idea how much gas the trucks consume, what equipement exactly is needed to extract resources and whatever you can think about other expenses. All they know is how the market moves …
We miners sometimes (often?) overestiminate our knowledge or impact…
That’s just it. If you “really” want to know then you will have to do what I, and I’m sure many others have or are currently doing. Taking the time to understand what is going on in the trading world. What are they really looking at? How do they make their choices? Once you start to learn you realize how little the miner perspective matters to the market and the traders.
I remember in “Lets talk about ASIC mining” thay you were for ASIC and telling people how any change algorithm from ASIC would be stupid and how ASIC bigger hash rate is great for coin…you bough lot off ASIC in hope off cash in off GPU miners kick out and now you cry about hashrate going more then you like…
You had more then enough coins to see how it went when it went to ASIC …and i other people gave you then a lot off examples…you all talked how in Zcash thing would be different and how Bitmain will threat Zcash differently…totally childish thinking.
Yeah im starting to think the same… Got my Z9’s two days ago and just taking out to cover electrical costs awesomeminer is showing me a profit of $6200.00 a month… My electrical rate is cheap 7 cents Per Kwh… So im not quite sure why its being stated that by January they wont even cover electrical costs anymore… Plus what if Zcash goes back up to $500+ a coin aint no way it wouldn’t be profitable…
Just a little more info so you guys know I’m not talking out the side of my head. One of the Twitch traders I follow keeps a tracker up so viewers can see how he’s doing on his positions. It’s insane. He’s long on BTC in this and shorting the heck out of ETH by the looks of it.
He’s 452% on his BTC position that’s 4.5 X folks.
He also 954% on his Shorting of ETH…9.5X folks.
They can make money regardless of what difficulty is, your costs, my costs, profitability to mine? They can profit on a Bull market, they can profit on a Bear market. Granted his ETH position is small (he mainly does BTC), but it’s the fact it can be done, and he’s just “one” trader.
can confirm! most traders don’t really care about miners, usually only care about network’s security. traders/miners often have divergent interests. miners might hate it, but traders love seeing hashrate jump like ZEC currently is. most traders believe price follows hashrate.
It also equal risk for everybody and entry level tends to be reasonable. But it’s requires a lot of knowledge and control to be “good” at it. You can win big, or lose your shirt if you aren’t disciplined it seems.
I hate to tell you but whatever you are looking at is wrong, two Z9’s will NOT make you 6200 a month… Right now you are looking at usd $900 to $1200.00 a month.
Current pricing you need 440,000 to 480,000 H/s to make that a month.
If you have nine full Z9’s, then you should making slightly below $5000 USD per month at today’s prices after electrical costs. That’s assuming the performance of the Z9 is exactly 40k sol/s as advertised, giving you a total of 360k sol/s and taking yesterday’s average difficulty of 29,531,805 from here. I used this calculator which let’s you adjust the monthly change in network difficulty to give you a more accurate projection several months out. Inputting your electrical costs of 7 cents per kWh and a total power consumption of 9000W (conservative) along with the aforementioned stats projects a profit of about $4500 USD this month.
That’s where projecting future profits becomes tricky, because the network hashrate growth has been over 60% per month recently. So if you take that rate of growth and the above stats, you’ll see that next month your profit is projected to be just $1500 USD, with projected profits of ~$725 USD and ~$300 USD in the following two months. These figures also result in a projected loss starting in January, assuming this rate of growth continues and prices stay stagnant. If growth slows down to half the current rate (30% per month), then this caculation improves, but it still projects a loss starting in June of next year.
Of course if the flood of new ASICs slows down dramatically next month, then these projections could prove to be extremely pessimistic. The numbers would also change drastically depending on the ZEC price, and certainly if you’re assuming $500 ZEC in the near future then things start to look much more promising. The ideal scenario, and one that’s fairly likely in my opinion, is for the network hashrate growth to slow down to about 30% or less per month and the ZEC price to rise above $300 USD, which should allow for all current miners to achieve ROI by this time next year.
I don’t mean to be intentionally alarmist, and I welcome feedback on my projections.
Sadly the growth has been speeding up still. We have yet to reach the peak. Was a 200% change over 90 days just a week ago. Now its up to 270% change in last 90 days. This is getting rediculous…
I’m showing over 420,000 Sol/s poolside on slushpool each one of my Z9’s in turbo mode is getting between 47K - 51K sol/s it fluctuates… I did not mean to come off rude or anything of the sort its just from what i was seeing being reported to me by software i was still in a profitable scenario…
Reap what you sow 
