Economists to Develop BTC 'Equilibrium Price' Paper

Emiliano Pagnotta and Andrea Burasch have proposed a theoretical structure for networks based on proof of work, which include bitcoin and ethereum.
17 April 2018   460

Two economists have developed a model for estimating the price of bitcoin and other assets in decentralized financial networks. This is reported by CoinDesk.

Emiliano Pagnotta and Andrea Buraschi, professors of finance at Imperial College London, presented a theoretical framework for evaluating networks using the Proof-of-Work consensus mechanism, including Bitcoin and Ethereum.

In their model, analysts use two main variables: the number of users representing the demand side, and the hash-rate of the miners representing the supply side.

The authors draw attention to the fact that decentralized financial networks are unique, since the crypto-currencies in them "simultaneously perform two functions". In addition to being an asset, they also encourage the miners to maintain the network. The equilibrium price of a crypto currency is a solution to a "fixed-point problem, characterized by the interaction of consumers and miners."

Researchers write that this problem has 2 solutions under any set of conditions, one of which is $ 0.

Indeed, if the price of bitcoin were zero, miners would not provide any resource to the network, and its trust would be zero. Consumers would derive no utility from the system and would not pay a positive price for bitcoins.
 

Emiliano Pagnotta and Andrea Buraschi

Professors of finance, Imperial College Business School in London,

But there is a place in this model for a positive equilibrium price. What that figure is depends on the network's hash rate, the expected number of future network users, and the value users place on the network's resistance to censorship, they argue.

According to Pagnotta and Buraschi, a change in regulation in China will have a greater impact on the cost of bitcoin than the same changes, for example, in the UK. Despite the fact that the number of bitcoin users in both countries is approximately the same, there are more miners in China, which means that the restriction of their activities will have a stronger impact on the hashrate and, consequently, the price.

Factor the authors did not take into account is "pure speculative motives," which arguably affected the price of bitcoin more than any other development in 2017.

HashFlare Users to Face Withdrawal Issues

Looks like Bitcoin cloud mining is not super profitable
18 July 2018   118

Users of HashFlare mining pool can't withdraw their funds, while their contracts are threatened with a temporary ban. Even lower restrictions on withdrawal of funds in the amount of 0.03 BTC caused problems for users, but the service raised the threshold to 0.05 BTC and 0.1 ETH . This is reported by Cryptovest.

In addition, financial pyramids are often promoted under the guise of mining contracts for cloud mining. For last few months, there was a big jump in mining difficulty of many cryptocurrencies, so, old contacts had become unprofitable.

As reported, the reason for the locked funds dates back further - at the beginning of June, so much hashing power was flowing into the Bitcoin network that contracts saw all the mined coins go toward their maintenance fee.

Currently, more and more users who have purchased contracts at earlier stages are facing the fact that they can not withdraw their funds. One of them managed to return the money spent through the bank card operator after filing a corresponding complaint.

To anybody that purchased a Hashflare cloud mining contract with a credit card, it might be possible to get a refund with that credit card as one of my followers tipped me. He bought his contracts at the end of 2017.
 

bccponzi at Twitter

The hash rate of bitcoin increased from 13 EHash / s at the beginning of the year to more than 40 EHash / s in recent months. The difficulty of mining in the present conditions depends on the circumstances of the specific miner. The cost of bitcoin mining for some of them is $ 4,400, while others spend about $ 5,800. However, in 2018, cloudy mining is called an even more dubious occupation than before, especially when it comes to mining bitcoin.