Price will continue to fluctuate but not much more than usual IMO. The more interesting piece will be the reaction of miners and longer term price and fee trend.

Miners will abandon ship when it happens. This will mean the difficulty will need to adjust back down. But the first 2016 blocks might be much slower than normal, which will affect the immediate supply. You'll need less money coming in in order to maintain the price which be upward pressure on the price. Of course, it comes down to if it's already priced in or not. So it depends what the consensus is on whether the price is going to go up a lot. I'm sure a lot of the irrationals will just assume it will double in value. It won't be anywhere close to this effect, even if no one planned for it (say the halving surprised everyone). My gut feel is people are so aware this is coming, they would be over-compensating.

The biggest opportunity I see is an overreaction from miners who will sell equipment cheap due to the difficulty not dropping by half right away, thus becoming unprofitable and wanting to get anything for their hardware, then as the difficulty drops, it becomes profitable again. I think you see the blockchain really slow down and stall considerably and that 2016 blocks take perhaps as long as 5 weeks to mine. This would freak out miners and cause a rush to sell, and you might be able to score some bargains during this freak-out period. Miners tend to be far less invested in Bitcoin and are mostly profiteers looking for an easy buck. At least that's the way it used to be, although that could have changed as mining became less profitable and requiring more serious investment.

I think the price is going to go up. The bitcoin price appears to be mainly influenced by three groups of people:

1) Hoarders. These Kool-Aid drinkers think the price is going up long term and they sit on their coins as an investment. The block reward change does not alter their hoarding strategy.

2) Casual bitcoin users who buy things with it. The largest component of these is silk road users. This group does not care what the price is, and just buys coins when they need them to spend, so the block reward change does not alter their strategy either.

3) Miners. There are two main types of miners, those who sell all their coins every day to pay their expenses, and those who are well off enough to hoard all of them. After the block reward change, the group that sells coins every day will be dumping half as many coins at a minimum, and likely significantly less than half as some of them shut down. This makes fewer coins for groups 1 and 2 to buy from, exerting upward pressure on the price.

None of these groups has a direct interest in making sure the price has the block reward change "already factored in". This market has proven to be extremely reactionary. The block reward is only a tiny factor for group 1, and the influx of money from group 2 is constant. But the supply from group 3 is dropping.

The price will go up.

I agree long term, but I don't think we know the size of the group who thought, the price will go up after the halving I'll buy now (2011, summer, last month, last week) and after the reward drops sell to all those people you mention.

I'm interested to see just how slow the network gets before the first difficulty adjustment after the halving.

But if a large number of the hoarders incorrectly think "the price will double once the reward goes down!", they will be sorely disappointed and start unloading. Also, if there are any people like you who think there will be a short term bump in price, it makes sense to hoard even more than you normally would, with the anticipation to sell once the price bumps. The hoarder group can influence things tremendously (think $30 -> $4 last year) if they panic and start to sell. To assume their actions is constant is silly.

When we use the term "hoarder" .. how many bitcoins do you really think they have? Like, 100.. 1000 .. 10000??

I guess it's all relative, a hoarder would just be someone who holds their coins for the expectation of future gains (as opposed to someone who's passing through to use Silk Road or play on Sealswithclubs or do whatever).

Have like 500 in 5 dimes available .. if anybody wants to trade for some bitcoins let me know.

It's going to vary a lot. A lot of early adopters have huge amounts. Later adopters could have very minor amounts. There could be a decent number of people who hold just a few "just in case" it skyrockets".

Based on my estimates from almost 2 years ago, I figured the price floor just from hoarders was probably around $3-4/BTC. There's a good chance this number has gone up since then, and doesn't even scratch the surface when you account for the value that comes from people actually using it.

I'm really amazed that the block rate has not decreased. It seems to imply that very few were barely profitable or most people don't mine for profit, neither of which seem right to me.

Oh, I know what I wanted to bring up. The "currency exchanges". How the heck are people NOT profiting off this? Lets take for example:

GDMP --->> BTC (btcpack.com)

By my knowledge it's around 30$ in fees per $250 MP. That is INSANE. This fee is ridiculous. What are the limitations?
- Starting cap?
- Buying the GDMP (I hope not)
- Cashing the GDMP
- Exchanging the BTC back to cash !?!

Obviously the last seems most likely. Considering you can only cash X amount of dollars per month to a PayPal with GDMP. Though I can't help buy think how many possible ways there are to filter this money back to cash. Sure you would be getting 100% of the fees, but gosh darn .. You'd be getting a pretty prenny.

What about that people are getting more efficient at mining? I haven't followed closely, but people with FPGAs and ASICs (those were the rumors) or at least better video cards could keep up with the people dropping out. Plus free electricity or people who already have the hardware.

Sure I don't doubt that plenty of people are very profitable for whatever reason. What surprises me is that there isn't any noticable group at all who was marginally profitable. It makes no sense that everyone would be very profitable or else more people would have previously piled in driving profits down.

It would be (really roughly) like if exactly half of all the silver in all the silver ores in the world (but not already mined silver) disapeared and none of the mining operations needed to close.

The difficulty dropped a lot after the big crash, but the price increasing is keeping it profitable for more people. It's not that operations aren't closing, they are. The ones that aren't are becoming more efficient and making up the gap.

It's like how oil is harder and harder to get to, yet more was being drilled, even though it was harder. Technology made it cheaper to get the hard stuff, and the price kept going up.

I can totally see that long term, but if oil got twice as expensive to get out of the ground in one minute the production level would have to drop immediately after that right? Even if tech improvements over the year brought it all the way up, it has to dip right?

In the oil industry I'd expect a slower shutdown since there are projects in progress that you would wrap up I suppose.

Actually on the day of the halving the average was over 7 blocks/hour and now in the last 24 hours it is 5.33 blocks/hour. That's significant. Maybe all it was is people turning off manually when I'd assume they'd do it in an automated way or at least manually within hours.

Do you realize how much I want to get like 5 of those ASIC machines?? I have free internet and electric. Would anybody consider doing some 2p2 BTC mining?

Just puttin it out there ...

EDIT: Or just one Mini Rig from Butterfly Lab (http://www.butterflylabs.com/order-f...e-sc-mini-rig/)

.. Just came in my pants thinking about it.

I don't know much about mining.. but I assume free electric is the nuts, and automatically means it makes sense to mine? Are the payouts so little at this point that it takes a while to make back starting cost of rig? Are you guaranteed to have free electric for the foreseeable future?

I'm interested, potentially, I'd like to learn more about how much value there is nowadays though, from either you or whoever knows.

If you get one of the ASIC machines in the first week or so then you'll make decent cash at the start. Within a few weeks of the release (assuming they actually deliver) it will even out and your ASIC machine will be like one of the GPU rigs people use now.

Have around 150BTC for sale if anyone is interested. Price will be mtgoxlast+6% vig.
Payment options: Stars, FTP, MB (USD or EUR are both fine), Neteller (USD), WilliamHill, Partypoker

Have many references. You will send first.

Afaik, nobody has even seen a prototype of those ASIC machines and the owner is formerly convicted for fraud.

Id be interested in working with someone who has free internet+electricity, but wouldnt want to do business with butterflylabs.

http://calvinayre.com/2012/11/30/con...mmary-ao-video

free internet and electricity here in meXico, interested in starting a 2p2 mine

Are you guys sure you know what you're talking about? I am not sure, but electricity does not seem like it is anywhere near as big a factor as the upfront cost of an ASIC rig. So your free electricity is worthless for ASICs. That 4.5 GH jalapeño only uses 4.5 watts of power. GPU miners use like 3000w to mine at that rate. You will be way better off just buying bitcoins with your 30k by wiring money onto MTGox.

Pretty sure you guys would be way in the back of the line if you order now anyway, as it made the news a few months ago when they got like $1mil in preorders. You guys are way too late to the party. The time to mine was when bitcoin started getting discussed on 2p2 two years ago. Just play poker instead now.

I think what people don't factor in is the fact that your can just sell the machine afterwards. So u buy one for 30k make 30k in btc .. then sell the machine 15k. Ya heard?

Here's my question ... when you Google 'bitcoin calculator' .. are those things accurate? Even if its 25% of what you get its still a good value!

With GPUs if bitcoin goes BOOM you can sell to gamers. With ASICs your chips is worth 0.

Bitcoin price is essentially a reflection of the valuation of a bunch of people who think it will go BOOM with some % and to the MOON with some %. If you think BOOM is low you should buy bitcoins not ASICs. Unless for some reason you think that both BOOM and MOON are really low %, but that's impossible imo.

On top of that you need to worry about whether ASICs will come (risky to preorder) and you need to worry about getting your ASIC late when difficulty is way up (risk to wait to order).

Cliffs: If you think bitcoin is awesome buying bitcoins >>>> mining