![](https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2F8ZRI0RL.png%3F1&t=665&c=MyfY1Cp-qdihZQ)
The graph of log change in mining efficiency has the shape of 1/(log difficulty) ..
*Please note the axes are mislabeled. The left y-axis is 1/log difficulty and the right y-axis is log J/GH
what is interesting is that difficulty is outpacing technological change. Economics would predict that they will eventually converge to an equilibrium, and we see that during much of 2014 as ASIC tech kept pace with network growth-
Whenever the orange line (energy efficiency) is above the blue line (difficulty), changes in difficulty are exceeding changes in efficiency and vice versa. So right now, difficulty is outpacing tech. progress. When ASIC first introduced, technology outpaced network growth (difficulty is a direct measure of network size)
So put one last way - the purple shaded area exists when the network growth is outpacing technological change. The data on GPU mining is admittedly not complete having just one representative data point, but I think that it nonetheless tells the same story.
Green areas exist when technological change is outpacing network growth. When they line up, the "supply and demand" is in equilibrium..
IN GREEN AREAS, ONE WOULD EXPECT TO EARN OUTSIZED RETURNS TO MINING WITH THE NEWEST TECH.
And this also tells a nice economic story: In the beginning, people mined with CPUs and all was well. GPU mining came along and only served to crowd out CPU miners by growing the network exponentially. But since GPU cards are not developed with the express purpose of mining - they are made mainly for computer graphics - they were not induced to improve. GPUs
just happened to be better than CPUs. It's like mining for gold with a shoe because it happens to be better than a sock. Also, since CPUs and GPUs run inside a PC which is normally left powered on anyhow, the electricity usage extracted for mining was less obvious than it is now. And GPU mining also started to crowd out lesser GPUs. We see this as the difficulty chart starts to level out a bit in 2012.
This all changed with ASICs - specifically designed to mine. The shoe was replaced by a shovel. The shovel then turned into a steam shovel and then a modern-day mining operation. It is only with ASICs that the economics begin to line up because the induced technological change is making for better shovels and not finding something better than shoe which also not a shovel.