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Bitcoin Volatility Puts Miners Under Pressure
An anonymous reader writes "The virtual currency Bitcoin lost 21 per cent of its value yesterday, equating to a total loss this year of 44 per cent. Reports have suggested that this rapid fall is squeezing computer supporting systems and is raising alarm about its future viability. Bitcoin's value fell to $179.37, 85 per cent lower than its record peak of $1,165 at the end of 2013. In total, nearly $11.3bn has been lost in Bitcoin's value since its 2013 high. The decline has raised concern for Bitcoin 'miners' who support the transactions made in the digital currency, and whose profits become squeezed as its price falls against traditional currencies." The Coindesk article in the linked story gives a blow-by-blow on yesterday's valuation drop; right now, Bitcoin has jumped back up and stands at just over $216.
Just another commodity rip off scam. We need a medium of exchange that stands by itself, not subject to speculations of the 'market'.
“He’s not deformed, he’s just drunk!”
thereby redistributing the mining hardware and decentralizing mining, as it arguably should be.
Large scale decentralized mining isn't going to happen, though, because mining will always be at the edge of profitability, where only the most efficient survive. Those are the large scale operations in areas with cheap electricity.
Having your expenses denominated in one currency, and your revenue in another, leaves you open to currency fluctuation risk. This is why currency hedging was invented in the first place.
So, overpriced speculative currency found to be overpriced?
When BitCoin was worth over $1000, why was it worth over $1000? Because people said it must be, not because it's backed by anything which objectively made it worth that much.
I've always looked at BitCoin and wondered what the value was in it -- sure, people said "Yarg, no regulations, no governments". But did you really think that would last? Or that without those people would be honest?
Basically BitCoin created a bubble, inside of a reality distortion field, and people assumed it would go up forever and always stay that way. And it's been all hype since then. But it seems like we've been discovering that the players are either shady or incompetent, and that it doesn't look like all of the voodoo magic ascribed to it.
BitCoin seems like it's always been an idea, but somewhat divorced from reality. Essentially, it placed value on ... what ... large prime numbers?
As someone who has always been skeptical of BitCoin, I don't find myself seeing any reason to think it was ever anything but something people wanted to believe in, but which was never going to pan out as claimed.
This is like the people who were still buying tech stocks at the end of the .com bubble. It's musical chairs, but with money. Only now people are starting to realize there's not a lot of seats left.
Lost at C:>. Found at C.
I am not sure about the rest of you, but I expected this and IMHO Bitcoin will be subject to high volatility for a long time to come.
Also is it not possibly that there are entities out there purposely trying to undermine it? Such as governments who can no longer control the money supply (and their favorite hidden form of taxation, inflation!). Destroy the confidence people place on Bitcoin, if enough lose faith it will start a negative feedback loop and we can watch it spiral down to it's death.
The problem is that Bitcoin doesn't really work as a currency when the price is wildly swinging by over 25% in a single day.
Could you imagine being a store that only sold their goods with Bitcoin? They would have to reprice their entire inventory every hour to insure that they are making a profit on what they're selling!
Instead, most businesses that take Bitcoin have to use a service like Bitpay peg the Bitcoin transaction price to something more stable like US dollars. Even then, the Bitcoin exchange services are taking a big risk that the Bitcoin to USD price isn't going to suddenly fall. I'll bet that those services will soon need to increase their fees or offer more favorable exchange rates for themselves to stay in business.