Difficulty increase, 25% fewer coins being mined in a few hours

[Littleshop]

Once the difficulty rises and Monday comes around I expect a little bit of recovery as the flow of mined coins slows a bit.  We have had big difficulty increases before, but this is one of the top ones in recent times. 

[N12]

I expect the opposite. ASIC miners are likely not selling some part of their profit margins. As the profit margins erode, the percentage of the daily 3600 BTC goes up they have to liquidate to pay expenses. But this is an effect that works over months.

[Littleshop]

I expect the opposite. ASIC miners are likely not selling some part of their profit margins. As the profit margins erode, the percentage of the daily 3600 BTC goes up they have to liquidate to pay expenses. But this is an effect that works over months.

I am assuming that most of the smaller ASIC miners hold some coins, and the bigger players sell.  Could be wrong.  But for the short term we will see a drop in the number of coins available for sale until the price creeps up a bit to encourage more selling.

[lucas.sev]

I expect the opposite. ASIC miners are likely not selling some part of their profit margins. As the profit margins erode, the percentage of the daily 3600 BTC goes up they have to liquidate to pay expenses. But this is an effect that works over months.

I am assuming that most of the smaller ASIC miners hold some coins, and the bigger players sell.  Could be wrong.  But for the short term we will see a drop in the number of coins available for sale until the price creeps up a bit to encourage more selling.

It's not like there is a shortage of coins avaiable to sell.

[coinnewb]

Don't follow the logic.  Increase difficulty does not mean fewer coins mined.

[rudrigorc2]

Don't follow the logic.  Increase difficulty does not mean fewer coins mined.

I think OP meant was, with this ever rising trend miners will get fewer coins if they dont constantly expand their farm every 2016 blocks, if you realize very few players can afford to do that, then what he says its true.

[Birdy]

Atm more than 3600 coins are mined a day, because the hasrate is increasing, but difficulty adjusts only every 2 weeks.
If the hasing power is going to drop instead after this this could very well mean a difference of 500-1000 coins a day.
It's funny, Bitcoin kinda has a build in puffer system to slow growth or decrease of value.

It would also mean that transaction would be slower than now (atm ~8 min instead of the ~10 min).

[Littleshop]

Don't follow the logic.  Increase difficulty does not mean fewer coins mined.

Short term yes it does.  Long term the goal of the formula is for an average rate of 3600 per day.  We are at least 25% above that now. 

[Birdy]

Don't follow the logic.  Increase difficulty does not mean fewer coins mined.

Short term yes it does.  Long term the goal of the formula is for an average rate of 3600 per day.  We are at least 25% above that now.  

No, increased hashrate means more coins than average.

Difficulty only determines the amount of coins per hasrate.
Increased difficulty however will mean less margin for the miners unless the BTC price rises.

[ElectricMucus]

I hate to be the first to break it to you, but an increasing hash rate and hence difficulty means more bitcoin mined over the same time period.
That's how difficulty works, the adjustment is lagging behind the real hashrate with the result of faster blocks than 10 minutes.

[Littleshop]

Don't follow the logic.  Increase difficulty does not mean fewer coins mined.

Short term yes it does.  Long term the goal of the formula is for an average rate of 3600 per day.  We are at least 25% above that now.  

No, increased hashrate means more coins than average.

Difficulty only determines the amount of coins per hasrate.
Increased difficulty however will mean less margin for the miners unless the BTC price rises.

Somehow either you are splitting hairs or not reading what I am saying. 

I said the GOAL of the formula is for an average 3600 per day.  If this statement correct or incorrect?

[Birdy]

Somehow either you are splitting hairs or not reading what I am saying.  

I said the GOAL of the formula is for an average 3600 per day.  If this statement correct or incorrect?

The statement is correct, however the result will most likely be way over this goal (at least if this difficult increase keeps going).
I don't think a difference of 20%+ is splitting hairs, it does have quite an impact.
The effect isn't necessarily short term either, it could rush half a year to a new high and then just stay at this level.

(Most of the answer was still to coinnewb though, should have made the quote clearer)

[Littleshop]

Somehow either you are splitting hairs or not reading what I am saying.  

I said the GOAL of the formula is for an average 3600 per day.  If this statement correct or incorrect?

The statement is correct, however the result will most likely be way over this goal (at least if this difficult increase keeps going).
I don't think a difference of 20%+ is splitting hairs, it does have quite an impact.

Agreed and that speaks to my point.   A 20%+ correction is coming.  It will not make the output be exactly 3600 a day, but right now the output well above that and about to be tamped down. 

[BitcoinAshley]

There are a lot of people who think the number of coins mined daily has absolutely no effect on price.

There are a lot of people who think the number of coins mined daily has a LOT of effect on price i.e. overstating its effect.

We can compare the number of coins mined daily to the number of coins sold on exchanges daily to determine the significance of the potential supply increase. We can 'guess' how much miners on average are hoarding at any given price point - and we can even ask a bunch of miners about this. We can look at how current price and trend both affect the number of coins sold by miners - and we can look at the coming obsolescence of GPU bitcoin mining and consider that some miners may be hoarding more than usual in case their reward becomes insignificant due to rocketing hashpower from ASICs. We can look at the laws of economics and figure out how much the quantity of mined coins affects the "supply" side of things - and that is the extent to which it affects price.

But, we cannot just say "Lol, difficulty increases, therefore, price _______" and leave it at that. It's just a wee bit more complicated than a stated-as-self-evident statement followed by a half-assed attempt at connecting one or two overstated factors to the supply side of the price.

[CoinBomb]

also, if big miners are selling off, it doesnt necessarily have to be on mtgox, or any other exchange. they can settle for whatever price they wish, and not affect the market at all.

[ElectricMucus]

also, if big miners are selling off, it doesnt necessarily have to be on mtgox, or any other exchange. they can settle for whatever price they wish, and not affect the market at all.

It does, whoever is buying them can not buy at the exchange with the same money.

[ISAWHIM]

Are you adding-in the "activation of another 50,000GHs of Asics" into that calculation...

Knowing what it will be at "change" is irrelevant unless it stays that way, and you can cash-out earnings immediately. Knowing how much lower it will be in a week, after you have accumulated enough to cash-out, and the trending value, is more important.

Even at these prices... there are less "buyers", and more "sellers"... Since the volume of trades/sales is what it was, when BTC sold for $10/BTC... Thus... You know where it is headed....

Down to the gutter. Now that ASICs AND USERS are both cashing-out, not just the ASIC miners... They refuse to let them take the rest of our high value, so we lowered the bar, and will continue to lower it, until no-one wants to buy it, or cash it out... because buying it is cashing-out the ASIC's earnings, and not ours...

Was nice knowing BTC while it lasted... Until the asic miners have real debt/loss/value... then it will not rise again. A slow death of denial ends quick when reality sets-in...

Even then, there are those who just never get past denial...

[Birdy]

Are you adding-in the "activation of another 50,000GHs of Asics" into that calculation...

Knowing what it will be at "change" is irrelevant unless it stays that way, and you can cash-out earnings immediately. Knowing how much lower it will be in a week, after you have accumulated enough to cash-out, and the trending value, is more important.

Even at these prices... there are less "buyers", and more "sellers"... Since the volume of trades/sales is what it was, when BTC sold for $10/BTC... Thus... You know where it is headed....

Down to the gutter. Now that ASICs AND USERS are both cashing-out, not just the ASIC miners... They refuse to let them take the rest of our high value, so we lowered the bar, and will continue to lower it, until no-one wants to buy it, or cash it out... because buying it is cashing-out the ASIC's earnings, and not ours...

Was nice knowing BTC while it lasted... Until the asic miners have real debt/loss/value... then it will not rise again. A slow death of denial ends quick when reality sets-in...

Even then, there are those who just never get past denial...

The end is near! Doom, destruction, the end of the world and maybe even a little bit more of doom!
SELL SELL SELL!

Obviously the volume is low when the price is staying at the same range (currently ~$100).
When BTC was sold for only $10 you have to divide the volume by ten to compare it the current level (because 1 BTC transfers 10 times the value).

[coinedBit]

There are a lot of people who think the number of coins mined daily has absolutely no effect on price.
There are a lot of people who think the number of coins mined daily has a LOT of effect on price i.e. overstating its effect.

It is generally understood that mining as many coins as quickly is good for the persons/pools mining, right ?
It is also generally understood that mining difficulty will increase once too many coins are generated too quickly.

Consequently, mining is more profitable as long as you have a certain edge, so that you can mine profitably without overly affecting difficulty.
Increasing mining difficulty will make even ASIC hardware less profitable fairly quickly, especially once it is widely shipped and deployed.

Thus, it is no surprise that ASIC vendors are having a hard time delivering their products: economically, it simply makes more sense to mine NOW rather than 3 months from now. There's basically time decay at work: powerful ASIC hardware will suffer serious theta-decay once it is widely used.

Difficulty is already increasing at ~30% currently, so things will become even more dramatic during the next months, which is why it makes sense to run ASICs now, rather than sell them.

Just imagine for a second that you were providing GPU/FPGA miners in early 2010: Would you have sold it, or would you have used it for yourself ?
Obviously purchasing hardware (especially custom stuff) is expensive, but fortunately there's the concept of "pre-orders" a modern form of "crowd-funding", where customers are willing to pay for hardware that they will only get their hands on after significant time-decay.

[ScaryHash]

Thus, it is no surprise that ASIC vendors are having a hard time delivering their products: economically, it simply makes more sense to mine NOW rather than 3 months from now. There's basically time decay at work: powerful ASIC hardware will suffer serious theta-decay once it is widely used.

Difficulty is already increasing at ~30% currently, so things will become even more dramatic during the next months, which is why it makes sense to run ASICs now, rather than sell them.

.

You're right that running ASICS now will be more profitable. The problem is, there are few ASICS that you can get your hands on if you decided to go the ASIC route today. You can't get them tomorrow, if you decided to order one today (with the possible exception of block erupters and blades on Ebay, for a princely sum of money).

I can tell you that just because difficulty is rising, it simply doesn't matter.  I just added +30% hashing power. That decision was made a while back.

Looking at the pool I mine at, a bunch more 68-70 gh/s  contributors popped up, so the total hash power went up probably by 30% just in the last week.

The fact that difficulty is rising and hashing power is going up is based on orders/decisions that were made 3 or more months ago. Those results are just coming in now.

So, extending that train of thought, the decisions that are being made now will affect hashing power 3 or more months from now. The ASIC bandwagon is just getting here. It will be a while before it's all sorted out.

I don't see any evidence that hashing power will continue to slow down. In fact, it's going to increase probably at a constant rate of 20-30% for the next 3-6 months. At some point, probably around the holidays, people will step back and evaluate things. But for now, its going to the moon.

People who are getting ASICS now are ahead of the curve, due to proper planning, funding, and foresight. Kudos to them.