Bitcoin Forum

I predict down.

It has never hit 140k before (as far as I know), I assume it is from all the OCN fanboys turning on their computers overnight, and will drop considerably once they realize what they've done/how pointless it is for them.

I'd like to see it go down, but I think more likely it will stabalize for one more set of blocks before creeping up again.  I think a lot of the OCN people caused a giant surge and are already stopping because they don't have any idea what Bitcoins are, how they work, and thought it was just a way to make quick money doing nothing.  That's certainly the tone I got from the post on OCN and the way people were responding.

Halfway through the previous difficulty BitcoinCharts estimation of total network speed ranged from 0.95 - 1.05 tHash.  When I was able to look at BitcoinCharts this morning it was 1.07, which is nowhere near as much of an increase as the next difficulty is estimated to be.

Value has gone ~300% up within quite short time, having +40% more difficulty doesn't hurt it much, I would say it will go more up :)

* sigh *  alas, i must agree.

You're forgetting the BFI_INT part. People earned around 10-15% out of it. Before any of this, the network hashrate was around 750, and spiked beyond 800 a few times. The simple addition of BFI_INT would have the exact same network anywhere around 825~920 Gh/s.

Also I, too, am expecting the OCN crowd to bail out of mining within a couple weeks.

you guys are dumb if you think it's going to go down. It will grow at an exponentially higher rate and this will continue on and on and on and on..

...because it can only ever increase (http://bitcoin.sipa.be/speed-lin.png)? (Hint: it's gone down twice before...)

Personally, I believe it will continue to increase for at least the next month. But suggesting exponential increases for ever and ever is naive.

I think you are naive thinking that since it decreased once after the mistery miner dropped that it will ever really have a chance at dropping again. If anything expecting increase at exponential lvl after bitcoin gets more out in the open isn't naive at all in comparison to your hopeful wishes.

EDIT: if you dont know the mistery miner, consider it a huge botnet that mined and inceased difficulty at huge levels before dropping out completely which left the difficulty to drop for the second time in history if i'm correct. First instance occured early in the bitcoin timeline when it was more or less at it's infancy compared to now.

Except that's not what I'm thinking. I said it had dropped twice before. "Mystery Miner" accounted for one of those drops. I believe it's entirely possible that "OCN folk getting bored" could account for a future drop. Heck, I believe there could be any number of reasons for future drops, just as there are different reasons for the more than one previous drops.

"My hopeful wishes"? Excuse me? Citation, please.

I noticed you trying to appear smart by pointing out the time it decreased without stating a real reason why it did. I wanted to point that out to the rest of the readers who may not know.

As for your hopeful wishes other than appearing intelligent on the internet, is you hoping my suggestion of exponential growth is naive.

By all means provide an explanation for one of the occasions on which difficulty decreased - my point was that it had decreased on more than one occasion, for different reasons. And that this suggests that it may, just maybe, decrease in the future, for different reasons. If you want to infer that I'm trying to appear smart, fill your boots.

I have no idea what your last sentence means, so I'll acknowledge that I'm clearly not that smart.

As long as the rate at which bitcoins are being generated is greater than the constant value expected as built into the network, the difficulty will increase; as simple as that.  So, the more miners online, the more difficulty in general.  It will almost certainly stabilize soon though as I am not aware of significantly improved GPU releases imminent, software is pretty optimized now and the flux of new miners is likely to slow I think.

A difficulty decrease in the distance future isn't going to mean much unless the current explosive growth rate doesn't continue for more than a few rounds.

For example, if difficulty increases 40% five times, then decreases 10%, it's still going to be 4.8 times higher than the difficulty today.

So this talk about potential one-off difficulty decreases isn't all that relevant unless it happens ASAP.

I'm positive we will see difficulty decreases at some point in the future. However, that's like saying we'll have an earthquake at some point in the future. Sure it's a given, but unless you can predict when it will happen you can't really factor it into your decisions all that much.

The real question is whether or not the marginal profitability of mining in non-bitcoin currencies (e.g. USD) will ever fall. I, for one, doubt we'll see it reach current levels again unless we see another shocking run-up in BTC value.

Correct. A decrease would follow a period in which bitcoin generation slowed down, for example due to a large number of people becoming interested in mining over a short period of time, and then losing interest over an equally short period of time (which I speculate could happen in the next month or so, iif the recent influx is largely due to the coverage in OCN), or a large-scale miner (a botnet, a render farm, or whatever the current theory for "Mystery Miner" is) going offline. I can think of several scenarios in which generation drops (all somewhat unlikely and of relatively minimal impact given the comparative number of increases) but that I can easily imagine occurring at some point.

Almost, but the number of people 'losing interest' and quitting the mining game would have to be larger than the number of new miners bringing their hardware to the table. Word of bitcoin is spreading fast, so new miners are going to be a fact of life until marginal profitability decreases significantly.

I think it's an unlikely scenario, and I agree that the total outflow would need to exceed the influx, but I was factoring natural wastage in as well as the hypothetical OCN influx/exodus - I'm assuming that in any given period miners will stop mining (possibly for short periods) due to equipment failures, higher-than-expected utility bills, moving house, etc. (Incidentally, I'm also assuming that this wastage will decrease as miners become increasingly sophisticated - I'm assuming that most mining operations right now are largely hobbyist).

I can tell you that the difficulty will rise to the point of mining just being barley profitable at average energy prices within two or three adjustments.   The only thing that will make mining more profitable is the price of a BTC going up, and difficulty will again follow the increase.


You will look back at this time as a time where mining was easy.

I'm predicting the next difficulty to be 207,000.

Yes, I think you're probably right (at least on the first paragraph), but... we've been here before. In late January we'd hit USD parity, mining was easy, difficulty manageable. Then we had six weeks of increasing difficulty and declining price, which led - in part through the perceived scarcity of bitcoins caused by increased difficulty - to a rapid rise in price. Mining is easy again.

My point is that I believe this is likely to be cyclical, and your second paragraph suggests an end of easy mining that I think is overstating things. I strongly suspect that mining is going to get difficult again - but it won't last.

Let's not forget that there are many, many gamers who already own high-end video cards. After all, that's why these cards were produced in the first place.

And a not-insignificant portion of these gamers are in situations where they personally don't pay for increased electricity use (i.e. dorms, fixed-rate utility apartments, living at home). For this crowd, mining is perceived to be 100% profit no matter what the price.

I wouldn't make any bets on this being cyclical after n=2 samples. While I'd certainly agree with you that the bitcoin exchange rate drives growth and equilibrium of mining, I have a much harder time believing that the difficulty of mining influences the exchange rate.

After all, most miners are in it for the USD (or EUR, etc.) profits, not the BTC profits. I can't help but think that most of these miners immediately sell their BTC, which effectively pushes BTC value down. At this point, the only thing holding prices up is demand for BTC. This is quite the wildcard right now and is probably more the realm of speculators than people actually expecting to use bitcoins to buy things. If these speculators get spooked or tired of the fluctuations and difficulties with exchanges (see CoinCard shutdown, MtGox DDoS) and decide to stop their buying, the value of BTC would quickly go down.

I'm speculating, but I think this group is one that's possibly most influenced by difficulty. Sure, fixed and variable financial costs are near zero, but they're not stupid - they know that running their machines hot 24 hours a day will mean buying a new gaming rig sooner than they'd planned for. They look at current difficulty, think "free money", then think things through harder once difficulty increases. Additionally (and this is why I was thinking about "natural wastage"), this group of miners is more likely to be semi-itinerant - my mining operation (such as it is...) is very fixed - I'm not likely to move house any time soon. Gamers are going to consist of a higher proportion of young people and students, who move houses more frequently (leading to down time), or who share houses/apartments (leading to objections to noise/heat).

On two samples, sure. This is pure speculation on my part. As regards difficulty influencing price - I'm surprised! It seems intuitive to me that difficulty affects supply. OK, supply is growing steadily, but as demand grows that demand can be met by mining, purchasing bitcoins, or by selling a good or service in exchange for bitcoins. With difficulty increasing, mining yields less, so the options for obtaining bitcoins are reduced.

I suspect you're correct, at least for the gamer/miner demographic, and probably for much of the rest of the mining demographic as well (I realise that there are some miners - myself included - who mine mostly to hold, believing the future value of bitcoins to be substantially higher than the present value). Playing Devil's Advocate, however... the gamer/miner can possibly afford to mine-and-hold more than the investor/miner who needs to recoup the cost of their mining rig...

Damn, I better squeeze in as much hashing power between now and the next difficulty increase. It would be nice for us miners if price stabilized for a few months :P

Youch..to fit into the $380 price seems a bit hard. I've found a 5870 card for $150 but according to your estimation that's nowhere enough hashing power per $

I think it is pretty much near impossible to get 1 Ghash for $380 or less.

$820 I can easily do :D..we shall see. Either way I'm buying a new 5870 soon.

This must be based on a very high cost of electricity.

The time horizon should be close to the economical lifetime of the hardware.  Anything else is just arbitrary.  What time horizon are you using?