<p>The price of CEX.IO's GH/S asset is based on the total future expected payout of a Gh/s of mining hardware, factoring in management fees and the time value of money.  The current price already factors in future difficulty increases, as these are predictable and expected events.  The price should not move significantly when the difficulty adjusts, as the occurrence and magnitude of the adjustments are not a surprise to any informed participant in the market.</p>

CC BY-SA 3.0
2013-11-16T12:36:50.983Z
So you mean that the market is entirely rational. But how do you explain the drop in price from 0.2 to 0.08 (-60%) in just 45 days? Were the buyers back then less rational? I don't think the available/expected information changed much over that period (except for a rocketing BTC price).
chris
CC BY-SA 3.0
2013-11-16T21:11:09.860Z
CEX.IO's GH/S is essentially a dividend producing asset, as it can be deployed on GHash.io to produce mining revenue.  As a GH/S pays out, it makes sense for the price of the asset to fall accordingly.  In your example, the buyers at 0.2 BTC would be ahead if more than 0.12 BTC was paid out during the time they held the GH/S.
Dust
CC BY-SA 3.0
2013-11-17T02:25:33.013Z
Very interesting. But wouldn't be also correct to say that the main reason for GH/S' price decline is the increase in its supply? As comparison, it's like a company that has only so much income to pay out (per period) as dividend and keeps on issuing new stock. The stock price would decline and so would its yield in nominal terms, punishing existing shareholders. At the end I'm trying to determine at which price (if any) it makes sense to buy CEX.IO's GH/S...
chris
CC BY-SA 3.0
2013-11-16T11:07:25.460Z
2013-11-16T11:07:25.460Z
Dust
<p>For example, today on CEX.IO I can buy 1 GH/S for 0.08 BTC. From my understanding, a change in difficulty is imminent and will increase roughly by 20% (<a href="http://bitcoinwisdom.com/bitcoin/difficulty" rel="nofollow">http://bitcoinwisdom.com/bitcoin/difficulty</a>).</p>

<p>Will the price for GH/S decline by roughly 18.3% (1/1.2)?</p>

<exchange-rate><difficulty><cloud-mining>
Is it correct to assume that the price of cloud GH/S will vary proportionally with the difficulty change?
chris
# Is it correct to assume that the price of cloud GH/S will vary proportionally with the difficulty change?

(Asked by: username_0 on 2013-11-16)

For example, today on CEX.IO I can buy 1 GH/S for 0.08 BTC. From my understanding, a change in difficulty is imminent and will increase roughly by 20% (<http://bitcoinwisdom.com/bitcoin/difficulty>).

Will the price for GH/S decline by roughly 18.3% (1/1.2)?

**Tags:** exchange-rate, difficulty, cloud-mining


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## 1 answers

### Answer by username_1 on 2013-11-16. Score: 1 | Accepted answer

The price of CEX.IO's GH/S asset is based on the total future expected payout of a Gh/s of mining hardware, factoring in management fees and the time value of money. The current price already factors in future difficulty increases, as these are predictable and expected events. The price should not move significantly when the difficulty adjusts, as the occurrence and magnitude of the adjustments are not a surprise to any informed participant in the market.

> **Comments:**
> **username_0**: So you mean that the market is entirely rational. But how do you explain the drop in price from 0.2 to 0.08 (-60%) in just 45 days? Were the buyers back then less rational? I don't think the available/expected information changed much over that period (except for a rocketing BTC price).  
> **username_1**: CEX.IO's GH/S is essentially a dividend producing asset, as it can be deployed on GHash.io to produce mining revenue.  As a GH/S pays out, it makes sense for the price of the asset to fall accordingly.  In your example, the buyers at 0.2 BTC would be ahead if more than 0.12 BTC was paid out during the time they held the GH/S.  
> **username_0**: Very interesting. But wouldn't be also correct to say that the main reason for GH/S' price decline is the increase in its supply? As comparison, it's like a company that has only so much income to pay out (per period) as dividend and keeps on issuing new stock. The stock price would decline and so would its yield in nominal terms, punishing existing shareholders. At the end I'm trying to determine at which price (if any) it makes sense to buy CEX.IO's GH/S...  

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