A plateau?

[zergcow]

Why does everyone calculate difficulty as either liner OR exponential? Shouldn't there be an economic plateau? As in n Ghs of power cost x $. As hardware improves the Ghs per dollar of hardware cost goes up More bang for you buck) which makes the difficulty increase. Sure older hardware becomes obsolete with increasing difficulty to the point that it isn't profitable to mine with that hardware. So those older machines go offline, however the cheaper Ghs means that the overall Ghs on the coin are still high. But at some point the economics have to kick in to thew point that people stop buying hardware because the market is too saturated and the profitability just isn't there. Hence a plateau in difficulty until the next machine raises the Ghs per dollar again.

I have seen some people estimate that by Jan the difficulty will be around 1billion and that by the end of 2014 it will be over 10 billion especially with 2Ths machines on their way. So is it just everyone's belief that it will always be exponential or at least somewhat liner? Or do people expect a plateau at some point?

[Fletcher11]

There will be a plateau i.e. the point where it is cheaper to buy Bitcoin then it is to mine it. The big question for people buying mining equipment is where that plateau will hit because it is dependent on cost of electricity, power efficiency of your miner, price of Bitcoin and what is acceptable margin (i.e. if electric cost is $100 to mine $100+X of Bitcoin what is my X where I stop). The new proposed miners are supposed to be more efficient which drives up difficulty before you hit the X value.

The reason everyone calculates linear or exponential is because during this transition time where pre-ordered mining equipment is coming on-line no one knows where the plateau will be. The big question is how many months is a given difficulty calculator is good for. The only way to know is to wait and see where the difficulty is in three months.

[spect0r]

As long as new hardware keeps being developed that's much better than previous generations we shouldn't see any plateau in any aspect of mining. Electricity cost doesn't matter much in the btc mining business as it's under 20% of the hardware cost.

[odolvlobo]

Predictions have been exponential because there are the factors driving the difficulty value are exponential. There will be plateaus, of course. I don't think anyone believes that the difficulty can increase 30% per period forever.

I think the next plateau will be when the difficulty increases to be point where power costs are significant. This will start happening in several months when the Avalon miners are shut off, but power efficiency of new devices is increasing as fast as hashing speeds, so it will probably be another 6 - 8 months before there is a real plateau.

Also, I think that even the plateau will be increasing exponentially as hardware continues to improve, but the rate will be in the Moore's Law range, like the 2011-2012 period was