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Author Topic: predictions of future difficulty  (Read 1981 times)
professor21 (OP)
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June 30, 2015, 03:53:52 PM
 #1

is there a way to predict the future difficulty of mining or is it set by someone?  and everyone thinks the price will go down in the future?  so with 0 electricity I am still not going to make a profit with buying 2 s3s and power supplies at $300?
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June 30, 2015, 04:37:39 PM
 #2

is there a way to predict the future difficulty of mining
No.  As blocks are mined within a difficulty period, the closer you are to the difficulty adjustment, the better you can make a bet - https://bitcointalk.org/index.php?topic=1102528 - you can even try to look at historic network hash rate and/or difficulty and make a guess as to how likely it is that it's going to go up by N% or down by M% - http://organofcorti.blogspot.com/2015/06/june-28th-2015-network-statistics_29.html - but you can't really predict it particularly well enough to make exact decision on.

or is it set by someone?
It's algorithmic.

and everyone thinks the price will go down in the future?
'Everyone'?  No.  Some say it will go down, some say it will go up, some are going to ask 'how far into the future?', etc.  Nobody has a working crystal ball.

so with 0 electricity I am still not going to make a profit with buying 2 s3s and power supplies at $300?
Plug it into an online calculator, change some variables around (mostly difficulty), see what happens.

Make sure you compare any results against just straight-out buying BTC, and try to put some figure on resale value of the miners and/or PSUs for a more complete picture.

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June 30, 2015, 04:54:11 PM
 #3

Difficulty adjustments happen every 2016 blocks. Depending on how long it took for the network to "mine" those 2016 blocks, determines the magnitude, and the sign (positive or negative) of the adjustment. If it takes less than 14 days, the difficulty adjustment is positive. If the elapsed time is say 12.5 days, then the increase will be larger than if the elapsed time is say 13.8 days. If it takes longer than 14 days, then the difficulty will be lowered (i.e. a negative adjustment).

The whole point of the difficulty adjustment is to try and maintain a steady pace of blocks, and the associated Bitcoin reward within. As I view it it, it's intended to "regulate" the rate at which new coins are added to the "money supply".
professor21 (OP)
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June 30, 2015, 05:04:20 PM
 #4

there's a modified taylor series calculation for the logarithm.  I'm kind of wondering bitcoin isn't tied to any country with technology, economy, image, GDP, does it have real value so that the price can go up long term?

#include <iostream>
#include <cmath>
 
inline float fast_log(float val)
{
   int * const exp_ptr = reinterpret_cast <int *>(&val);
   int x = *exp_ptr;
   const int log_2 = ((x >> 23) & 255) - 128;
   x &= ~(255 << 23);
   x += 127 << 23;
   *exp_ptr = x;
 
   val = ((-1.0f/3) * val + 2) * val - 2.0f/3;
   return ((val + log_2) * 0.69314718f);
}
 
float difficulty(unsigned int bits)
{
    static double max_body = fast_log(0x00ffff), scaland = fast_log(256);
    return exp(max_body - fast_log(bits & 0x00ffffff) + scaland * (0x1d - ((bits & 0xff000000) >> 24)));
}
 
int main()
{
    std::cout << difficulty(0x1b0404cb) << std::endl;
    return 0;
}
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June 30, 2015, 05:10:24 PM
 #5

I replied to this very query via the PM you sent me.  I've included that reply here as well:

Calculation of difficulty is far easier than this.  The difficulty changes based upon the block solve rate.  Bitcoin wants to add a new block to the chain every 10 minutes.  Every 2016 blocks it performs a sanity check and adjusts the network difficulty.  The network says, "the previous 2016 blocks should have taken 2 weeks.  How long did they actually take?"  If the answer is, "it took longer than 2 weeks", the difficulty is adjusted downwards.  If it took less than 2 weeks, the difficulty is adjusted upwards.

Here's the formula (simplified version, but it's close enough):
Code:
Difficulty * 2^32 / hash rate = time in seconds to solve a block
Since you know the perceived hash rate and the time it took to solve the block, you can calculate the difficulty.  See, the network itself has no concept of actual hash rate... surprise!... it only knows the difficulty and the time it took to solve a block.  It calculates the hash rate based on this.  This is why you see such variant spikes in charts like those found on bitcoinwisdom.com.

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philipma1957
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June 30, 2015, 05:13:21 PM
 #6

is there a way to predict the future difficulty of mining or is it set by someone?  and everyone thinks the price will go down in the future?  so with 0 electricity I am still not going to make a profit with buying 2 s3s and power supplies at $300?

you are a very interesting poster.   you display real knowledge in math and you ask simple questions.  if you buy  2 s-3's and a psu for 300 usd today with no power cost you should turn a profit.

As you can see I have done extensive series of diff threads dating back to Last summer.  yet it is all past preformance
info.  With your math skills I am pretty sure you know past performance is no guarantee of future performance.

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TheRealSteve
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June 30, 2015, 05:18:08 PM
 #7

Calculation of difficulty is far easier than this. [...]
Here's the formula (simplified version, but it's close enough):
Code:
Difficulty * 2^32 / hash rate = time in seconds to solve a block
Since you know the perceived hash rate and the time it took to solve the block, you can calculate the difficulty.
Just to clarify - that's a (slightly simplified) formula for converting between a known difficulty and hash rate.

The difficulty changes based upon the block solve rate.  Bitcoin wants to add a new block to the chain every 10 minutes.  Every 2016 blocks it performs a sanity check and adjusts the network difficulty.  The network says, "the previous 2016 blocks should have taken 2 weeks.  How long did they actually take?"  If the answer is, "it took longer than 2 weeks", the difficulty is adjusted downwards.  If it took less than 2 weeks, the difficulty is adjusted upwards.
And that code is here: https://github.com/bitcoin/bitcoin/blob/master/src/pow.cpp#L53 (CalculateNextWorkRequired)

While this...
there's a modified taylor series calculation for the logarithm.
Code:
lots of code off the wiki
Is the code to get from the compact 'bits' form to a difficulty value.  It's not used to determine the next difficulty.

I'm kind of wondering bitcoin isn't tied to any country with technology, economy, image, GDP, does it have real value so that the price can go up long term?
And that's a completely separate question along the lines of "What makes Bitcoin have value?".. a question you probably should have googled before Smiley

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June 30, 2015, 06:24:02 PM
 #8

And?

IBM 2880W PSU Packages: https://bitcointalk.org/index.php?topic=966135 IBM 4K PSU Breakout Boards & Packages: https://bitcointalk.org/index.php?topic=1308296 
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alh
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June 30, 2015, 06:51:08 PM
 #9

I have to ask: What motivated you to purchase your mining hardware and begin mining Bitcoins?

Various folks all have a different set of motivations for mining, though a common one is "to make money". While it sounds like it should be easy based on the common thinking of Bitcoin, that proves to be a fairly elusive goal. You have picked up on difficulty as being a key "ingredient", which it is. There is also the price of Bitcoin (i.e. what you can exchange it for in terms of  money where you live). What's interesting is that difficulty seems to follow price. By that I mean if the price of Bitcoin were to double, you can count on difficulty to increase over time. What we have seen for a big chunk of 2015 is that as price has fallen, difficulty has more or less "stabilized", though not really fallen since the end of 2014. In case it wasn't obvious, 2014 was a brutal year for mining, as it seemed like every 12-13 days, the difficulty would jump 5-10%, sometimes 20%. That was relentless, and almost caertainly due to the "ASIC Arms Race" for more hash rate at any cost. It's clear that thinking can't last forever.
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June 30, 2015, 08:56:13 PM
 #10

but there was a sudden increase in difficulty in 2014 and with high difficulty changes around 20% the calculators show that I may never recover my investment
Of course you won't recover your investment if you assume the network is going to have a 20% difficulty increase every adjustment while the exchange rate of BTC remains static.  Sure, there were plenty of large upward adjustments in the past as ASIC adoption became widespread and huge industrial mining farms came online.  You'll also notice that things have settled down quite a bit.  11/5/2014 was the last time the difficulty adjusted upwards of more than 10%.  Since then, we've gone from a difficulty of 39,603,666,252 to our current level of 49,402,014,931.  That's 17 adjustments, of which 7 of them were adjustments down.

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June 30, 2015, 09:09:29 PM
 #11

but there was a sudden increase in difficulty in 2014 and with high difficulty changes around 20% the calculators show that I may never recover my investment
Of course you won't recover your investment if you assume the network is going to have a 20% difficulty increase every adjustment while the exchange rate of BTC remains static.  Sure, there were plenty of large upward adjustments in the past as ASIC adoption became widespread and huge industrial mining farms came online.  You'll also notice that things have settled down quite a bit.  11/5/2014 was the last time the difficulty adjusted upwards of more than 10%.  Since then, we've gone from a difficulty of 39,603,666,252 to our current level of 49,402,014,931.  That's 17 adjustments, of which 7 of them were adjustments down.

While I agree that the difficulty is way more "calm", that's only relative to our brutal experience in 2014. The difficulty has still adjusted upwards of 25% in about 6 months. That's about 56% per year assuming it remains this "calm". It's possible we have hit some kind of saturation point, that will essentially limit how rapidly difficulty can grow. If price were to go up significantly, I am certain we'll see bigger difficulty increases.
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June 30, 2015, 09:34:20 PM
 #12

While I agree that the difficulty is way more "calm", that's only relative to our brutal experience in 2014. The difficulty has still adjusted upwards of 25% in about 6 months. That's about 56% per year assuming it remains this "calm". It's possible we have hit some kind of saturation point, that will essentially limit how rapidly difficulty can grow. If price were to go up significantly, I am certain we'll see bigger difficulty increases.
Yes, the difficulty certainly has trended upwards, but that trend is nowhere near what it was last year.  Look back at prediction/ROI threads from last year... if you even thought about suggesting anything less that 10% increase per adjustment into a calculator, people dismissed you as a wacko Smiley.  Now people regularly throw around 2% increases as a good value to use.

Are we going to see increases?  I absolutely believe we will.  Do I think they will be 56% per year?  No.  ASICs aren't going to get much faster, or much more efficient any time soon.  Yes, they will improve, but not at the pace they did in 2013/2014.  Will new farms come online?  Yup, but a whole lot less frequently than the past couple years.

Of course, this is all speculation, and I'm just as likely to be eating my words 12 months from now Tongue

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June 30, 2015, 10:24:11 PM
 #13

In terms of increased hashrate, which of course directly drives difficulty, then it's anyone's guess. I see the following major wildcards to consider:

- The long fabled S7 from Bitmain. The speed, efficiency, and price are completely unknown at this time, though we should have real insight within the next 30 days (i.e. July).

- What impact will SFARDS have? They have a shiny new, over-priced miner, that they will likely self-mine with for at least a while. They will clearly run everything they have built, in order to try and recoup some of their development costs. How many PH?

- What's Avalon got cooking these days? My understanding is that they are done building 4.1's for now.

- What about Spondoolies? Very quiet from them it seems.

- What's 21 Inc. actually going to build? They have plenty of money to spend, and I'll bet it won't all go for wild office parties. Could be anywhere from some really efficient big miner, or tons of "light bulb" class miners. Giant crap shoot here.

- KNC is supposedly on the verge of 14/16 nm technology, that will "blow everybody else away". The reality and the timeframe?

It isn't hard to imagine another "ASIC Arms Race" in the 2nd half of 2015.

The final wild card is BTC price (i.e. exchange rate). If I had a reliable clue as to what drove BTC price, I'd be wealthy by selling my insight to KNC, SFARDS, Bitmain and others!  Smiley

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July 01, 2015, 12:01:33 AM
 #14

the price could go down and the difficulty could increase by 10-20%.  And I'm not sure I can get free electricity for 24 hours the price here is 0.13/KwH.  I really regret buying these 2 s3s now at 300.  Is there a place where I can sell them, I've posted on craigslist.



at 13 cents a kwatt you will lose money.


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July 01, 2015, 10:55:43 AM
 #15

..price here is 0.13/KwH..

hm, sorry to say, but you should just forget about mining generally, sorry but you are too late to party. there are guys are, which paying even less and the already stopped before monhts..
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July 01, 2015, 02:15:09 PM
 #16

the price could go down and the difficulty could increase by 10-20%.  And I'm not sure I can get free electricity for 24 hours the price here is 0.13/KwH.  I really regret buying these 2 s3s now at 300.  Is there a place where I can sell them, I've posted on craigslist.
I thought you stated that you were not paying for power?  Now that you state your costs are $0.13 per kWh, you are making pennies every day with those things plugged in.  Given the current exchange value of BTC and difficulty...

An S3 running at normal speed of 440GH/s consumes 340W.  440GH/s expects to make $1.15 a day.  Your power cost is $1.06 per day.  Your net earnings... $0.09 a day.  It's gonna take you quite a while to make back that $300.

By the way, you could always post them up for sale here on the forums as well: https://bitcointalk.org/index.php?board=75.0

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July 01, 2015, 02:20:12 PM
 #17

the price could go down and the difficulty could increase by 10-20%.  And I'm not sure I can get free electricity for 24 hours the price here is 0.13/KwH.  I really regret buying these 2 s3s now at 300.  Is there a place where I can sell them, I've posted on craigslist.
I thought you stated that you were not paying for power?  Now that you state your costs are $0.13 per kWh, you are making pennies every day with those things plugged in.  Given the current exchange value of BTC and difficulty...

An S3 running at normal speed of 440GH/s consumes 340W.  440GH/s expects to make $1.15 a day.  Your power cost is $1.06 per day.  Your net earnings... $0.09 a day.  It's gonna take you quite a while to make back that $300.

By the way, you could always post them up for sale here on the forums as well: https://bitcointalk.org/index.php?board=75.0

I think he is an older member with a new name and is trolling us.

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professor21 (OP)
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July 03, 2015, 05:10:59 AM
 #18

I got an offer for one around $120USD a loss of 30.  I am paying 0 for electricity I'm not sure I could run the miners 24 hours a day.  anyways I mean there isn't a great chance that the price could reach 500 or 1000 in the next few months and then I'm stuck with say 50-70USD  a month?

so if the difficulty increases as it is then my income monthly could go to 0 or close to that pennies?
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July 03, 2015, 09:32:37 PM
 #19

so either way I'm stuck with a very small limited amount of income with 2 s3s.  if the price goes down then so does my profit, if the price goes up and as you say the difficulty rise is guaranteed then I mine less coins, less profit.  I can only hope that less coins are mined so that the difficulty goes down while the price goes up a bit
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July 03, 2015, 10:18:59 PM
 #20

so either way I'm stuck with a very small limited amount of income with 2 s3s.  if the price goes down then so does my profit, if the price goes up and as you say the difficulty rise is guaranteed then I mine less coins, less profit.  I can only hope that less coins are mined so that the difficulty goes down while the price goes up a bit
Difficulty going up is not guaranteed, even with an increase in the BTC exchange rate.  It's very likely that it will, but it's not guaranteed.  Regardless, 2 S3s are indeed a very limited amount of income at current difficulty and exchange values.

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