Why the recent difficulty spike?

[haploid23]

I think within a few weeks, difficulty went from somewhere around 2,000,000 to almost 3,000,000 now, and continues to go up. Is this because of BTC value increased to $12/BTC or did a shit ton of mining hardware get purchased? With ASIC right around the corner, I wouldn't think the miner population would pour more money into GPUs or FPGAs. But since ASICs are not released yet, what is causing this rapid difficulty increase?

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[Undefined31415]

Perhaps more gamers heard about Bitcoin.

[crazyates]

The difficulty jumped over the 2million line about 8/12, about 6 weeks ago. See http://bitcoin.sipa.be/speed-lin-10k.png . Right now we're arround 2.8million. Noone knows for sure, but people estimate it has been BFL catching up on a lot of unfulfilled Singles and MRs. Plus I'm sure lots of GPUs have been been purchased, and other FPGAs besides BFL have been shipped.

I expect it'll hit at least 3 million before too long, but I don't think it'll go much over that until ASICs start shipping.

[jasinlee]

I am thinking it will end up doubling just from beta tests for the ASICs and employee testings.

Added this in relation to the difficulty increase.

http://betsofbitco.in/item?id=704

[helloworld]

ASICs are not released yet

Just because they haven't been 'released' (to the public), doesn't mean some privileged people aren't already mining with them.

[jasinlee]

My thoughts exactly.

[Graet]

a *lot* of fpga are still being delivered - not just from BFL
with the price of BTC going over $10 a *lot* of GPU miners that were not viable have turned their rigs back on for one last fling
and yes believe it or not people are still buying and setting up GPUs (generally second hand)
all of this combined makes for decent rise in difficulty without even needing speculation about ASIC "testing"

[mufa23]

BFL does burn-ins for a weeks before they ship out their products. My guess is they have started their burn-ins, considering thousands of ASIC pre-orders are going to be shipped in ~30 days. They do this to make sure each unit works before shipping it out.

I think the difficulty you are seeing now is a pretty good example of what we should be expecting by the end of this year. Perhaps a bit more after all the pre-orders are done. Then it will start to rise even more once everyone accepts BFL as not a fraud, and more orders are placed throughout the end of the year and begginning of next year.

EDIT: Turns out, they don't do burn ins for lengthy amounts of time.

[eleuthria]

The difficulty went up because the price went up.  That's pretty much all there is to it.  We were at $5-6 for a long time, suddenly we're at $11-12 for almost a month now, and we were rising for a while prior to the $11-12 numbers.  Obviously the difficulty will approximately double as a result.  The profitability of mining is what determines difficulty.

Difficulty will always tie back in to the price/difficulty ratio.  More precisely:  Block Reward * Price / Difficulty.

When the reward is cut in half, the difficulty will fall approximately 50%, unless the price rises, in which case the difficulty will fall less than 50%.

Mining is a numbers game.  When it is unprofitable, people leave, and the ratio is restored.  When it is profitable, people turn on new mining rigs and the ratio is restored.  There is a lag in this where difficulty can't rise immediately as the result of a price rise due to the delay of ordering new hardware, and people waiting to make sure it's not a short-term bubble.  Similarly, there is a lag in difficulty decreases because people won't turn off immediately after it becomes unprofitable, in hopes that a rebound may occur.  And there are always the small margin of people that will mine at a loss for fun/gambling.

[Inaba]

BFL does not do a burn in for weeks (or even a week) - 24 hours at most.

[mufa23]

BFL does not do a burn in for weeks (or even a week) - 24 hours at most.

Weird, I don't know why that was classed in the back of my head as fact. Just spent a bit of time searching the forum as to where I got the "couple of weeks" from, and can't find any evidence to support my claim. BFL states that they do a burn in for their FGPA's, and a quick test to make sure they connect to pools.

Thanks for the correction.

[dlasher]

the "spike" is actually a fairly consistent (10% +/-) increase over the last X weeks.. Next increase is looking like another 10%.

Press / PR / and fulfilled FPGA orders are my best guess for the ramp.

[nedbert9]

BFL does burn-ins for a weeks before they ship out their products. My guess is they have started their burn-ins,

...

EDIT: Turns out, they don't do burn ins for lengthy amounts of time.

BFL does not do a burn in for weeks (or even a week) - 24 hours at most.

Estimations

Initial BFL batch delivery.  BFL-Engineer has made claims having output velocity of hundreds of units per day once production line finished.  Remains to be seen.
20-50 TH

For these estimations 35 TH avg output is taken.

-Mass 'burn-in' testing - worst case - unlikley
BTC/USD generated with 24 hr burn-in at 12USD/BTC - at current difficulty (i.e. testing conducted at start of difficulty period)
~12285 ($ 147420)

Difficulty post "burn-in" activity
2.66x current difficulty
~7,637,709

BTC profitability per GH/day post difficulty adjustment
0.132 ($ 1.58)

-'Burn-in' activity distributed among 30 day period - suppresses difficulty - more realistic
1.17 TH tested per day

First period / First difficulty period
BTC/USD generated with 24 hr burn-in at 12USD/BTC - at current difficulty
~410 ($ 4920) / day
~5431 ($  65177) @ 13.24 days to difficulty adjustment
 
Difficulty post first period "burn-in" activity
1.05x current difficulty
~3,023,714

Remaining periods
BTC/USD generated with 24 hr burn-in at 12USD/BTC
~391 ($ 4693) / day
~6553 ($  78637) @ 16.76 days remaining in 30 day test period

BTC profitability per GH/day post difficulty adjustment
0.334 ($ 4.01)


Be sure to ask for your 'burn-in discount' when submitting your order for BFL SC units.

[GernMiester]

Simple. Clueless folks are using tens of thousands of CPU and 100Mh/s or less GPU's.
Raising difficulty so they make even less than nothing but think that they are making $12.00 a BTC when they are spending 10 times that amount in electricity.
That and free electricity college kids mining at school. Same as last year.

[ElectricMucus]

Simple. Clueless folks are using tens of thousands of CPU and 100Mh/s or less GPU's.
Raising difficulty so they make even less than nothing but think that they are making $12.00 a BTC when they are spending 10 times that amount in electricity.
That and free electricity college kids mining at school. Same as last year.

Yes it's good ol' GPUs, but I wouldn't exactly call them clueless. People simply get the latest 7XXX series which have become affordable now. Some of the guys with high electricity rate probably won't come out of this in the greens however.