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Date: Tue, 28 Oct 2014 17:57:01 -0400
Message-ID: <CANOOu=-JvCP78kAk67YkwenZgciTc9q0heaP3hLZvoqhu5StUw@mail.gmail.com>
From: Christophe Biocca <christophe.biocca@gmail.com>
To: Neil <kyuupichan@gmail.com>
Content-Type: text/plain; charset=UTF-8
Cc: Bitcoin Development <bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] Fwd: death by halving
Precedence: list

> The fact that it is known in advance is no counter argument to me.

But it does change miner behaviour in pretty significant ways.

Unlike difficulty forecasting, which seems near impossible to do
accurately, miners can plan to purchase less hardware as they approach
the revenue drop. You can do some basic cost/benefit calculation and
see that *if* margins are already low as the halving approaches, then
rational miners would cease purchasing any new hardware that wouldn't
be profitable past that point, unless they expect it to pay for itself
by then.

The lower the margins are, the longer in advance they would alter
their buying behaviour. You'd see an increased focus on cost-effective
hashpower (and older units would not be replaced as they break).
Either a significant supply of cost effective hardware shows up
(because it's the only thing that would sell in the last months), or
difficulty would stall long before the halving happens. Either way,
the predictability of the halving can reduce the hashpower on the day.

On Tue, Oct 28, 2014 at 5:34 PM, Neil <kyuupichan@gmail.com> wrote:
> Economically a halving is almost the same as a halving in price (as fees
> take up more of the pie, less so).
>
> Coincidentally the price has halved since early July to mid-October, and
> we've not even seen difficulty fall yet.
>
> I don't think there's much to see here.
>
> Neil
>
>
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