Does a high pool difficulty lower anyone's profits?

[h2odysee]

There has been a lot of discussion about this in the middlecoin.com thread: https://bitcointalk.org/index.php?topic=259649.new#new

Let's move it here, to keep the topics separate.

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[Liquidfire]

I now think the correct distribution for my simulation would be the Poisson distribution. Can any math geeks confirm or deny this for me?

[jdebunt]

only thing that lowers profitability is idiots dumping their coins to the lower buy order....

[Eli0t]

it creates very low profits for low hashers who cant submit a share before the round ends on fast coins

your pool sells coins at the lowest price possible, this also reduces profits

[Hydroponica]

Holy fuck, why don't you stop discussing it, and lower share difficulty for a day, and see what happens.

[GSnak]

only thing that lowers profitability is idiots dumping their coins to the lower buy order....

I thought that too, until I noticed all my orders getting left behind. Now I pretty much dump on the top bid.

[FlungSpun]

it creates very low profits for low hashers who cant submit a share before the round ends on fast coins

A - Low hashers cannot expect to submit a share for every block on a fast coin, what makes anyone think that they should be submitting for every block?

B It makes no difference because they will still submit on blocks in relation to their hashrate and earn accordingly.


and what happens when a block is solved in 1 share and it happens to come from a low hasher?
should all the big hasher cry foul ?

[Eli0t]

its possible to prove you worked on a solution for every block if the share diff is reasonable but when its high there can be long periods where you cant prove your working on a solution. when a pool doesnt credit you for the work you put in your wasting your time

[FlungSpun]

I really don't want to get drawn into this argument because I understand the mechanics but realise I won't be able to explain it clearly enough.

From a confidence perspective it would be nice for smaller hashers to be able to prove work for every block (lower diff)
But
The ratio between the high and low rates of share submission will not change (ergo payouts) because the big hashers will just inundate the pool with PoW shares.
There is one provision with that statement, it takes a relatively long time to average out the larger variance the small miners suffer.

[Damnsammit]

Regardless of your hashrate, a higher difficulty reduces latency between the miners and the pool server.

The drawback is that it also increases the day-to-day variance.  In the long-run, it doesn't matter, though.

[turtle83]

its possible to prove you worked on a solution for every block if the share diff is reasonable but when its high there can be long periods where you cant prove your working on a solution. when a pool doesnt credit you for the work you put in your wasting your time

In the long run it averages out completely. the hashers would have payout proportional to their hashrate. in the short run, with higher diffs low hashers have an increased variance...

The only reason for higher diff shares is efficiency, because lesser load on the networks, CPU, etc.

Does a high pool difficulty lower anyone's profits?

No. It only increases variance in the short term... which could go both ways.

[FlungSpun]

I'm pretty sure the last three statement have nailed this discussion.

[mueslo]

I now think the correct distribution for my simulation would be the Poisson distribution. Can any math geeks confirm or deny this for me?

If you had actually read the rebuttals, you'd know we already wrote that.

https://bitcointalk.org/index.php?topic=259649.msg2979579#msg2979579

[Agrippa]

Well it's nice to see some consensus here after all the insanity of the middlecoin thread.

Like I was trying to say before, complaining that your miner would have gotten to get a share had the block lasted just a few more seconds is not only wrong because it is a complete misunderstanding of probability, but because by that logic you might as well complain about all the wasted hashes that would have yielded a share on the very next block.

[FlungSpun]

Quick crib from Wikipedia cos that's always right.

imagine that with the dominoes H2 of middlecoin fame decides he wants to minimise his incoming traffic to keep his pool slick and reactive
but he need to do this fairly.

He tells all miners that he is not interested in dominoes that add up to 7 (they are the most common to be found)

UNLESS A 7 HASH SOLVES THE BLOCK they wont get sent.

Everyone has to abide by the same rules and have exactly the same chance of finding the outlier dominoes and be paid for the proof they are doing work.
by removing the central column of probability there is less network traffic generated but the odds remain the same for all.

http://en.wikipedia.org/wiki/Probability_distribution

[mueslo]

He tells all miners that he is not interested in dominoes that add up to 7 (they are the most common to be found)

UNLESS A 7 HASH SOLVES THE BLOCK they wont get sent.

That's pretty flawed analogy by any standard. Those distributions have nothing whatsoever to do with what actually happens, they aren't scalable.

This is the probability distribution of zeros: P(n) = 2^(-n), where 32≤n≤256 the number of zeros.

[turtle83]

He tells all miners that he is not interested in dominoes that add up to 7 (they are the most common to be found)

UNLESS A 7 HASH SOLVES THE BLOCK they wont get sent.

That's pretty flawed analogy by any standard. Those distributions have nothing whatsoever to do with what actually happens, they aren't scalable.

This is the probability distribution of zeros: P(n) = 2^(-n), where 32≤n≤256 the number of zeros.

https://i.imgur.com/rveuphy.gif

A 20 GH/s miner is twice as likely to solve a diff 1 share than a 10 GH/s miner.
A 20 GH/s miner is twice as likely to solve a diff 10 share than a 10 GH/s miner.
A 20 GH/s miner is twice as likely to solve a diff 100 share than a 10 GH/s miner.

[FlungSpun]

mueslo
yes very guilty of oversimplification but the analogy is not so flawed as to miss the point for some of the misconceptions I am trying to clear up.
I hope my description simplifies the issues without preaching anything baseless. I'm not explaining how crypto mining works just the fairness aspect of pool difficulty.

I didn't think presenting the information in the form you have above was going to help the discussion at this point.

If you want to take the discussion further in to the a detailed description and minutia of mathematics please be my guest.
I was getting sick of the huge misunderstanding some people were labouring under.

[Liquidfire]

I am in the process of updating my simulation script to include a more accurate distribution of block/share times.

I believe this to be a positive Poisson distribution at this time. I don't believe it will make much difference, but it needs to be addressed before some people will accept my work as proof.


For you new comers, the "con" argument to high diff is essentially this. Fast miners are more efficient at reporting their work, that is, they have less work go "unreported". Slower miners are less efficient at reporting their work, because the interruption of new blocks makes a larger percentage of their work go unrecognized. They will have been working longer without finding a share at block change.

Result: no change to overall pool profit. The effect is of the distribution if rewards.

The fastest miners are basically stealing some of the slowest miners hashrate, in terms of reward.

Now, I am no conpiracy theorist. However, it has crossed my mind that some of the people in this forum are some of the fastest miners. They might know about this effect, know it benefits them, and are therefore trying to keep the status quo. I am certainly not accusing anyone of that and I think it's unlikely that this is the case, just something to tuck away in the back of your minds.

[h2odysee]

In your simulation, I suggest you don't use any of those formulas, and just model mining as though it really is at the base level. Randomly generate a number between 1 and 100000, and if it's below 1000, it's a share. If it's below 10, it's a block.