Insane Prediction for difficulty increases

[DeathAndTaxes]

Instead of looking at doubling every x units of time how about look at how at a point where network will be in equilibrium at current price.

It will require some assumptions but you can also range these assumptions.

Hypothetical assumptions:
* Miners will not buy new hashpower when annual ROIC% is less than 100% (12 month break even).
* Miners operating cost is $Y per TH/s  (take average ASIC efficiency in terms of MH/J and average electrical rate $0.10?)
* Build cost of new ASIC is $X per TH/s.  Look as Avalon chips in bulk, estimated PCB costs, etc. 
* Market forces will eventually push margin on new units to a more reasonable gross profit of 30%? thus the sale price of new units will eventually be X*1.30

You can then estimate the point where the existing hashing power is large enough that the network is unlikely to rise without a change in conditions.  It is also unlikely to fall much because if it does then marginal miners will buy more rigs or turn old rigs back on.   Condition changes could include a significant (say 50% or more) rise in exchange rate, or the release of next generation ASICs (greater than 100% improvement in MH/J and MH/$).

Once you find this "saturation point" you can guesstimate how long it will take to get there and backtrack from there.

[mco65]

I hypothesize that difficulty increase will DOUBLE every 40 days from now until the market is flooded with ASICs

If we use this as a calculation for the difficulty rate in September we get:


15,000,000 x 1.20 ^ 4 =  31,104,000 (difficulty on 16/06/2013)

31,104,000 x 1.40 ^ 4 = 119,489,126 (difficulty on 26/07/2013)

119,489,126 x 1.80 ^ 4 = 1,254, 349,053 (difficulty on 1/09/2013)

These calculations presume that:
120 days till September
12 lots of 10
every 10 days difficulty increases
every 40 days that increase doubles

I hope i am wrong but at these levels even a 350Ghz miner in September wont really be a profitable ROI, even if the price of BTC was 350 USD

It could be some miners are hoping for a breaking point.. ie, it becomes so HARD to mine that MOST miners get out leaving only a hardcore group and eliminating some of the difficulty.  I for one do not think difficulty will continue to climb.. eventually it will go down and only those few left mining will reap any rewards..

[ewitte]

It could be some miners are hoping for a breaking point.. ie, it becomes so HARD to mine that MOST miners get out leaving only a hardcore group and eliminating some of the difficulty.  I for one do not think difficulty will continue to climb.. eventually it will go down and only those few left mining will reap any rewards..

It will climb for a while but its not going to be +33% forever.  It will eventually stabilize to a sustainable number. 

[yeemartin]

It could be some miners are hoping for a breaking point.. ie, it becomes so HARD to mine that MOST miners get out leaving only a hardcore group and eliminating some of the difficulty.  I for one do not think difficulty will continue to climb.. eventually it will go down and only those few left mining will reap any rewards..

It will climb for a while but its not going to be +33% forever.  It will eventually stabilize to a sustainable number. 

Agree, anything parabolic is not sustainable, BTC price or Mining hashing power.

[KS]

I hypothesize that difficulty increase will DOUBLE every 40 days from now until the market is flooded with ASICs

If we use this as a calculation for the difficulty rate in September we get:


15,000,000 x 1.20 ^ 4 =  31,104,000 (difficulty on 16/06/2013)

31,104,000 x 1.40 ^ 4 = 119,489,126 (difficulty on 26/07/2013)

119,489,126 x 1.80 ^ 4 = 1,254, 349,053 (difficulty on 1/09/2013)

These calculations presume that:
120 days till September
12 lots of 10
every 10 days difficulty increases
every 40 days that increase doubles

I hope i am wrong but at these levels even a 350Ghz miner in September wont really be a profitable ROI, even if the price of BTC was 350 USD

My view is that you shouldn't base your numbers on difficulty increase solely but also look at what is in the order books of Avalon, BFL etc.

Avalon 150T (500K chips on order) + about 80-100T in batch 1-3 miners (not sure whether chips are included in there twice).
BFL - who knows? say 250T (max would be 500T)
ASICMINER could bring another 200T
KNCMINER - say 150T for first 500 (mix n match of 175 and 350GH/s miners).
Bitfury & Others, who knows? say 500T

We're now at around 100T (easy number) and ≃16M difficulty.

So you'd need another 7400T to reach about 1.2B in difficulty. I don't see that happening right now.

[mgio]

um, mining diffiiculty is not exponential, it is linear.

It only looks exponential because we are in a technology transition right now.

It is reasonable to assume that once all the ASIC manufacturers are shipping, they will ship at a constant rate. Thus we won't see difficulty double regularly but rise at a high, but consistent rate.

[erk]

It could be some miners are hoping for a breaking point.. ie, it becomes so HARD to mine that MOST miners get out leaving only a hardcore group and eliminating some of the difficulty.  I for one do not think difficulty will continue to climb.. eventually it will go down and only those few left mining will reap any rewards..

It will climb for a while but its not going to be +33% forever.  It will eventually stabilize to a sustainable number.  

Agree, anything parabolic is not sustainable, BTC price or Mining hashing power.

If you are right, then Asicminer is going to go bust unless they can kill off the competition somehow.

[NewLiberty]

The chips will get much cheaper as volumes rise.
And also as demand falls.
Remember the free market?

[steelcutoatmeal]

It could be some miners are hoping for a breaking point.. ie, it becomes so HARD to mine that MOST miners get out leaving only a hardcore group and eliminating some of the difficulty.  I for one do not think difficulty will continue to climb.. eventually it will go down and only those few left mining will reap any rewards..

It will climb for a while but its not going to be +33% forever.  It will eventually stabilize to a sustainable number. 

I think you are absolutely right. Some of the forecasts around here get to insane numbers not realizing how much hardware would be involved in gaining such astronomical hashes per second.

[GigaWave]

It could be some miners are hoping for a breaking point.. ie, it becomes so HARD to mine that MOST miners get out leaving only a hardcore group and eliminating some of the difficulty.  I for one do not think difficulty will continue to climb.. eventually it will go down and only those few left mining will reap any rewards..

It will climb for a while but its not going to be +33% forever.  It will eventually stabilize to a sustainable number.  

I think you are absolutely right. Some of the forecasts around here get to insane numbers not realizing how much hardware would be involved in gaining such astronomical hashes per second.

Every estimate I have seen is based off already paid for devices. These are not numbers pulled from someones ass, they are based on known variables. And the numbers thrown around for BFL are likely on  the low end. The only unknown is when these devices will be delivered. Also just wait til KNCMiner starts production(they have only accepted what? 500 pre-orders?), if they succeed(which looks likely), the network hash rate is going to definitely be stupid high.  Next re-target  is already estimated at 18.2 Million and 890 blocks are still left.  And if the hash rate stays at 150TH, the following re-target would be about 20 million(quite unlikely, I'd put my money on it being 21+ million ).

Their will definitely be a point when the hash rate stabilizes, I'm just hoping not to many devices have been bought and the network is saturated. These devices still use quite a bit of power, so even if they sold dirt cheap, they still need to produce enough money to pay for power and have enough profit to keep operators interested. Before the block halving and the ASIC buzz, ROI was about 6-7 months, I have a feeling we are going to go quite a ways past that and hit at least 12 months ROI, which seems to be above the threshold for operators to keep miners running(at least in the past).

[NewLiberty]

It benefits Bitcoin resilience.

[ujka]

I hypothesize that difficulty increase will DOUBLE every 40 days from now until the market is flooded with ASICs

If we use this as a calculation for the difficulty rate in September we get:
15,000,000 x 1.20 ^ 4 =  31,104,000 (difficulty on 16/06/2013)
31,104,000 x 1.40 ^ 4 = 119,489,126 (difficulty on 26/07/2013)
119,489,126 x 1.80 ^ 4 = 1,254, 349,053 (difficulty on 1/09/2013)

These calculations presume that:
120 days till September
12 lots of 10
every 10 days difficulty increases
every 40 days that increase doubles

I hope i am wrong but at these levels even a 350Ghz miner in September wont really be a profitable ROI, even if the price of BTC was 350 USD

Hi, Can you correlate this data with the total hashrate needed to reach this insane amount of difficulty in a so short time frame?

1,254, 349,053 (difficulty on 1/09/2013) correlates to 9,000 Thash. From 150 Thash today.
You really think that's possible in 3 months?
That's 136,363 Avalons!
Or 32,142,857 Avalon chips.
Or 1,800,000 BFL Jalapenos.
Or 180,000 BFL 50Gh miners 
Or 25,714 KnCMiner's Jupiters (not even shipping by that date).
Or 75,000 Bitfury 120Gh miners (also not shipping by that date).
AsicMiner has some 100Th wafers done, but that needs to be assembled yet and put online.

[bobsmoke]

I hypothesize that difficulty increase will DOUBLE every 40 days from now until the market is flooded with ASICs

If we use this as a calculation for the difficulty rate in September we get:
15,000,000 x 1.20 ^ 4 =  31,104,000 (difficulty on 16/06/2013)
31,104,000 x 1.40 ^ 4 = 119,489,126 (difficulty on 26/07/2013)
119,489,126 x 1.80 ^ 4 = 1,254, 349,053 (difficulty on 1/09/2013)

These calculations presume that:
120 days till September
12 lots of 10
every 10 days difficulty increases
every 40 days that increase doubles

I hope i am wrong but at these levels even a 350Ghz miner in September wont really be a profitable ROI, even if the price of BTC was 350 USD

Hi, Can you correlate this data with the total hashrate needed to reach this insane amount of difficulty in a so short time frame?

1,254, 349,053 (difficulty on 1/09/2013) correlates to 9,000 Thash. From 150 Thash today.

You really think that's possible in 3 months?

Thanks for that! 
It seems difficult to reach that amount hashrate in place in ~75 days. It will imply 118Thash added daily starting today ....

PS: can you share how did you reach that value?

[jeannie]

I can't mine anything at all now with my gaming computer.   I guess unless I have ASICs, or I will just keep what I have and wait for another coin.

[PaperClip]

um, mining diffiiculty is not exponential, it is linear.

It only looks exponential because we are in a technology transition right now.

It is reasonable to assume that once all the ASIC manufacturers are shipping, they will ship at a constant rate. Thus we won't see difficulty double regularly but rise at a high, but consistent rate.

Totally agree. Everyone should understand that difficulty is directly proportional to total mining power. Every 1TH/s in mining network equals to 139.698,39 difficulty points, to be exact. For example - if network mining power will increase two times - then difficulty will increase two times too. New difficulty is based on average network hashing power during last two weeks. That's all you need to know about it

If difficulty increase would be exponential - that would require all ASIC miner developers to increase their miner production speed every two weeks by the same percent.
Basically, as soon as new mining device is developed and starts to mine - difficulty will grow too. If a lot of these devices are produced - then difficulty will grow rapidly until all devices are connected to network. Then difficulty growth speed will return to previous.

Current rapid increase is caused by some new mining device developer in arena. He has already added mining devices with total power ~40TH/s to network. (first 30 TH/s were added two weeks ago, and that was cause for big difficulty increase last time. And still continues to add devices to network even now). Anyway, next time difficulty will be around 19M (+21%) on 17th of June.

[NewLiberty]

um, mining diffiiculty is not exponential, it is linear.

It only looks exponential because we are in a technology transition right now.

It is reasonable to assume that once all the ASIC manufacturers are shipping, they will ship at a constant rate. Thus we won't see difficulty double regularly but rise at a high, but consistent rate.

Totally agree. Everyone should understand that difficulty is directly proportional to total mining power. Every 1TH/s in mining network equals to 139.698,39 difficulty points, to be exact. For example - if network mining power will increase two times - then difficulty will increase two times too. New difficulty is based on average network hashing power during last two weeks. That's all you need to know about it

If difficulty increase would be exponential - that would require all ASIC miner developers to increase their miner production speed every two weeks by the same percent.
Basically, as soon as new mining device is developed and starts to mine - difficulty will grow too. If a lot of these devices are produced - then difficulty will grow rapidly until all devices are connected to network. Then difficulty growth speed will return to previous.

Current rapid increase is caused by some new mining device developer in arena. He has already added mining devices with total power ~40TH/s to network. (first 30 TH/s were added two weeks ago, and that was cause for big difficulty increase last time. And still continues to add devices to network even now). Anyway, next time difficulty will be around 19M (+21%) on 17th of June.

It is exponential, but not on that period.
Moore's law is an exponential factor.
The current difficulty growth also may be transitory and due to other factors than ASICs.
Consider that there are large companies with many tens or even hundreds of thousands of computers that mostly sit idle.
If one or two of those devoted even unused CPU power, it could have such an effect.
Or animation studio render farms between movies with a room full of video rendering hardware + a bored admin and no worries about electricity.  Lots of other possibilities....
This also raises the notion that mining can grow even when it is not profitable under "normal" circumstances.

[bobsmoke]

If we have a 15% growth until September i.e difficulty = ~54M or hashrate = ~392Th...we will need to add ~2.5Th per day to the network starting today. ...hopefully we will not see that. However....thats like ~7 Knc Jupiters per day, i.e ~525 junipers. From yesterday to today only on the Slush pool there was an increment of 4Th

This amount of jupiters are very plausible since they already have more than 800 orders (where 1 order is for example 27 Jupiters)...interesting times!!


excel made by brishtiteveja @ https://docs.google.com/spreadsheet/ccc?key=0AjEbQ5LBKsAEdDYtajZTMi1Ua0ZkUXR0X0NKSnVaSXc#gid=0

[erk]

If we have a 15% growth until September i.e difficulty = ~54M or hashrate = ~392Th...we will need to add ~2.5Th per day to the network starting today. ...hopefully we will not see that. However....thats like ~7 Knc Jupiters per day, i.e ~525 junipers. From yesterday to today only on the Slush pool there was an increment of 4Th

This amount of jupiters are very plausible since they already have more than 800 orders (where 1 order is for example 27 Jupiters)...interesting times!!


excel made by brishtiteveja @ https://docs.google.com/spreadsheet/ccc?key=0AjEbQ5LBKsAEdDYtajZTMi1Ua0ZkUXR0X0NKSnVaSXc#gid=0

BFL have around 400TH/s on their order books. Probably more as this list is inaccurate.  http://bfl.ptz.ro/ so your 2.5TH.s per day averaged increase by Sep should easily be achieved and more.

[600watt]

If we have a 15% growth until September i.e difficulty = ~54M or hashrate = ~392Th...we will need to add ~2.5Th per day to the network starting today. ...hopefully we will not see that. However....thats like ~7 Knc Jupiters per day, i.e ~525 junipers. From yesterday to today only on the Slush pool there was an increment of 4Th

This amount of jupiters are very plausible since they already have more than 800 orders (where 1 order is for example 27 Jupiters)...interesting times!!


excel made by brishtiteveja @ https://docs.google.com/spreadsheet/ccc?key=0AjEbQ5LBKsAEdDYtajZTMi1Ua0ZkUXR0X0NKSnVaSXc#gid=0

BFL have around 400TH/s on their order books. Probably more as this list is inaccurate.  http://bfl.ptz.ro/ so your 2.5TH.s per day averaged increase by Sep should easily be achieved and more.

followed...

[PaperClip]

This might be interesting for those who want to understand logic behind raise of difficulty:

http://s20.postimg.org/rihqca9yx/ths.jpg
Network hash power during year (values are taken as average in 5 days). Chart of difficulty per day would look exactly the same. 1TH/s = 139.698,39 difficulty points

http://s20.postimg.org/45jotrtvd/miners.jpg
Rough estimation of hashing power distribution between miners

http://s20.postimg.org/p3ijten7d/miners2.jpg
Known hashing power of miners starting from 01/01/2013