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Author Topic: 54% difficulty increase in 3 days  (Read 6254 times)
cothoms
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June 22, 2011, 05:22:38 PM
 #21

I think we will see slightly decelerated growth even on the next increase, a few weeks from now... just enough time for the lag to start to kick in.

Not a miner.  An investor, speculator, and enthusiast.
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AngelusWebDesign
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June 22, 2011, 05:24:18 PM
 #22

Difficulty growth cannot continue indefinitely, because the network cannot be infinitely large.

Ok you are correct, but how many difficulties will it take before we reach an equilibrium?

Only 60,000 mtgox accounts in existence.  There are 330,000,000 people in the USA alone.  

I think there are plenty of unused GPU cycles out there, and the more media attention this garners, the more interested parties will fire up mining rigs.  That doesn't even count the gaming systems for WoW or Secondlife or any of the millions of PC games that are out there that don't do anything all day while their owners are at work.   All an owner needs to do is turn on guiminer and leave.

We're not anywhere near the saturation point of the network.

Yes, someday people will look back and consider US the early adopters. 
goldbit
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June 22, 2011, 05:26:04 PM
 #23

Here is my simplified model.  Tongue

Let P be the bitcoin price or more preciously, the profitability at this moment.
Let X be the total machine power in the network.
v = dX/dt = the change in new machine power in the network, or the velocity.
a = dX^2/dt^2 = the change in velocity -- the acceleration, which I believe is a function of P.
Let f be the friction, which is a function of both P and difficulty level.

If we solve this 2nd order differential equation and set the boundary condition, we should be able to get a equation for X.

It should note that the a is a leading indicator, while X is a lagging indicator, meaning the surge in bitcoin price a few weeks ago increases a instantly, but the change in X reflects a couple weeks later. It is logical to think that when a surge in price, people will start investing in new machines, but the new machines take time to procure, ship, and assemble.

The change in difficulty level affect f, which is a feedback factor. It should adjust v and drive the profitability to zero in the long run when the system is in equilibrium.

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bcpokey
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June 22, 2011, 05:35:44 PM
 #24

it should be noted that for that to make any sense the quantity X needs to be a function of time, which it is not.
AngelusWebDesign
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June 22, 2011, 05:36:45 PM
 #25

Wow, we DO have a few smart people in this sub-forum!

I must say, you stand out like a sore thumb...  Wink
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June 22, 2011, 06:03:32 PM
 #26

Here is my simplified model.  Tongue

Let P be the bitcoin price or more preciously, the profitability at this moment.
Let X be the total machine power in the network.
v = dX/dt = the change in new machine power in the network, or the velocity.
a = dX^2/dt^2 = the change in velocity -- the acceleration, which I believe is a function of P.
Let f be the friction, which is a function of both P and difficulty level.

If we solve this 2nd order differential equation and set the boundary condition, we should be able to get a equation for X.

It should note that the a is a leading indicator, while X is a lagging indicator, meaning the surge in bitcoin price a few weeks ago increases a instantly, but the change in X reflects a couple weeks later. It is logical to think that when a surge in price, people will start investing in new machines, but the new machines take time to procure, ship, and assemble.

The change in difficulty level affect f, which is a feedback factor. It should adjust v and drive the profitability to zero in the long run when the system is in equilibrium.

So, what does the price / profitability need to be at 7M difficulty, which it will hit in 6 more increases, given 50% difficulty-jumps per increase?

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Synaesthesia
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June 22, 2011, 07:02:39 PM
 #27

it should be noted that for that to make any sense the quantity X needs to be a function of time, which it is not.
Sure it is. Total hashing rate changes with time. And here's a graph of it.
So, what does the price / profitability need to be at 7M difficulty, which it will hit in 6 more increases, given 50% difficulty-jumps per increase?
Well that depends on mining hardware and electricity costs. But according to this it would still yield a profit even at 17$ a bitcoin! Try it!

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June 22, 2011, 07:05:07 PM
 #28

Well that depends on mining hardware and electricity costs. But according to this it would still yield a profit even at 17$ a bitcoin! Try it!

$17/bitcoin yields a profit at 7M difficulty.  But that doesn't factor in the hardware costs, right, only electrical costs?  And profit of $0.0000000001 is really profit?  Does that factor in the transaction costs for dwolla or mtgox?  Is 'it is still profitable' a reasonable statement, with fees?

What about the investment in hardware?

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June 22, 2011, 07:07:10 PM
 #29

Yes no transaction costs and no hardware costs taken into account. Sure it's not much profit. Remember you can sell hardware to recoup some cost  Wink So I would do that in September if the BTC price is still the same!

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June 22, 2011, 07:18:45 PM
 #30

Yes no transaction costs and no hardware costs taken into account. Sure it's not much profit. Remember you can sell hardware to recoup some cost  Wink So I would do that in September if the BTC price is still the same!

Ok so let's say we're mining 1.0Ghash (3 6970 cards at $300 ea).  We get 9 bitcoins during the 9 days of 877k difficulty.

Then we hit 1.3-1.4M difficulty, it lasts 9 days and we get 6 btc.

Then we hit 1.9M difficulty, 9 days, we get 4 btc

Then we hit 3M difficulty, 9 days, 2.6 btc

Then we hit 4.4M difficulty, 9 days, mine up 1.7 btc

Then we hit 6.7M difficulty, 9 days, mine up 1.1 btc

--------------------------------------------------------------------
Grand total: 24.6 BTC.   $17 ea = $418.00.

Initial investment: -$600 for 3 cards.

BTC value at $17: $418.

Cost to mine for 54 days: ($0.25/kwh)* (1.2kW system to pull 1.0Ghash) *24*54 = -$403.2

$418 -$600 -$403 = -$587

I am still not seeing any profit here.

To get profit, you'll need BTC to be worth about $40.75, and then you end up making $0.45 for 54 days of hashing, when factoring in the cost of just 3 cards and energy, not the CPU/Tower/Powersupply/Ram/Hdd/Etc.

45 cents is not profit. It pays for the hardware, and then maybe you could sell them used, for 50-75% of their value.  But you still have to factor in the cost of CPU/RAM/Tower/Powersupply/HDD/Cables/Etc.

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June 22, 2011, 07:25:29 PM
 #31

I think the right answer is that there's a delay in reaction -- things don't happen instantaneously.

The Mt. Gox hack was only less than 3 days ago, for crying out loud! (I know, it seems like a LONG time ago...)
Shocked it feels like months ago

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June 22, 2011, 08:18:36 PM
 #32

@coins yeah that's true 3 x 6970 just not worth it right now, but why I would rather look to get 2nd hand 5830's and 5850's and sell them again. Also I'm looking at bitcoins as a long-term investment.

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June 22, 2011, 08:41:10 PM
 #33

@coins yeah that's true 3 x 6970 just not worth it right now, but why I would rather look to get 2nd hand 5830's and 5850's and sell them again. Also I'm looking at bitcoins as a long-term investment.

Kk. I am too.  But I don't know if my 9 coins (expected total output at 330Mhash) will be worth much.  Hope so : )

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June 22, 2011, 08:50:19 PM
 #34

Kk. I am too.  But I don't know if my 9 coins (expected total output at 330Mhash) will be worth much.  Hope so : )
Economics is a social science, not an empirical science - thus hard to predict  Smiley

When it comes to investment, I guess the value has to do with confidence in it - as we have seen with the Mt. Gox crash, but I have confidence in bitcoin, that's why I'm investing in it.

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Jazkal
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June 22, 2011, 09:03:27 PM
 #35

Im also mining in texas... and I have 0 AC costs. Running my cards in the garage yields ~5c higher temps than running them inside, only added cost is my 4 box fans @ 75w each. My 4 rigs @8.5c/KwH are using ~5.25 in cost per day, while putting out ~2.5g/hash. Each rig is pulling down around 500-750W, Unclocking the memory to ~340 helped cut the machine usage by almost 100W per box.
What is the temp in the garage? 100* F?
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June 22, 2011, 10:20:12 PM
 #36

Well that depends on mining hardware and electricity costs. But according to this it would still yield a profit even at 17$ a bitcoin! Try it!

$17/bitcoin yields a profit at 7M difficulty.  But that doesn't factor in the hardware costs, right, only electrical costs?  And profit of $0.0000000001 is really profit?  Does that factor in the transaction costs for dwolla or mtgox?  Is 'it is still profitable' a reasonable statement, with fees?

What about the investment in hardware?
It's a much nicer picture if you factor in a BTC value of $60 at 7M difficulty.  I mean as long as we're playing Nostradamus here.

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June 22, 2011, 10:50:45 PM
 #37

Im also mining in texas... and I have 0 AC costs. Running my cards in the garage yields ~5c higher temps than running them inside, only added cost is my 4 box fans @ 75w each. My 4 rigs @8.5c/KwH are using ~5.25 in cost per day, while putting out ~2.5g/hash. Each rig is pulling down around 500-750W, Unclocking the memory to ~340 helped cut the machine usage by almost 100W per box.
What is the temp in the garage? 100* F?

Yeah Around that. ~38c Ambient temp, and around 45c idle temp on the GPUs.
Full load all the cards are around ~79c

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