Mining difficulty slowing down over the next 3 months?

[ajw7989]

Mining difficulty has been slowing down but i think it might ramp up to just under 20% with all the new miners coming out. I dont think we will see the huge 30% increases anymore until some brand new revolutionary design comes out.

[taipo]

[ takes out crystal ball and places on table - stares deeply into the globe ]

I am a firm believer that it will keep going up in leaps and bounds until the big players 'blink'.

For now they are just staring at each other, going tit for tat, matching hashrates to the difficulty changes. Meanwhile the cost to mine edges closer to the bitcoin rewards mined.

When the cost to mine reaches the point that there is not enough cash left over to upgrade and match the rise in difficulty, and pay bills and workers, then the difficulty rises will drop to a few percent every 14 day revolution and may even stablise.

But the new order of things will be something like the running costs being at about 85% to 90% of total mined bitcoins.

When it gets to that level, it won't change without something catastrophic happening politically, or to the tech or the network itself or the algorithm.

So if you have an Antminer S2 lets say the diff is at 65,000,000,000, BTC at $600, and its costing you about $4 USD per day to run, then you will be mining about $4.70 USD a day with your S2.

This is because the big players, eventually with their 1 PH/s racks would also be paying about $4000 USD a day ( at a guess ) to host those miners while earning a guesstimation of about $4700 USD in BTC per day.

If the value of BTC rises then large miners will afford to acquire even more miners pushing the hashrate and difficulty up and the $$$ gap between cost to mine and reward remaining about the same.

This is pretty much how the game is played everywhere else, in mining BTC it is no different. In particular its the way that China competes in business because many of their businesses can operate at thin profit margins, much thinner than anywhere else.

Eventually manufacturers in China will be the primary producers of miners, and most bitcoin will be mined there, and much of the BTC supply to the market will come out of China.

Around the world, many businesses could still run mining operations as a means of writing off profits, running their businesses at a loss and pocketing the Bitcoins themselves, however dubious that may be, that would be the only way to eventually compete, or at least, stay in the game and make something from it.

Any cartel of large mining operations in China could possibly do some damage to the world bitcoin economy if that all eventuates.

A quick look back at how OAPEC wielded supply during the Yom Kippur War is a good indicator of how supply can be used politically.

[ElGrandJefe]

A quick look back at how OAPEC wielded supply during the Yom Kippur War is a good indicator of how supply can be used politically.

Except we don't need bitcoin to fuel our cars or heat our homes.

Until recently, mining has been a pre-order game. Many of the PH systems that are going online now were ordered 6-9 months ago. That money is sunk, so the investors are going to try to get at least some return from their equipment, although the BTC price has fallen by 50% in dollar terms. Moreover, you can be 100% certain that these facilities have access to the cheapest industrial power around, so they will be on the grid for a very long time.

[taipo]

Sure we dont at the moment, but that piece above is a long term crystal ball speculation of what one possible future could hold in a world now running on the bitcoin protocol in the same way we buy packets of data, and access to TCP/IP without even thinking about it.

The difficulty acts a bit like a reserve bank in a sense, driving the cost of hashing up so no matter how much hash power there is, the flow of currency minting remains constant.

What happens if a bulk of the hashing power is in the hands of a cartel with central political objectives, after we arrive at that point where the cost of matching their hashing power is only possible by a well resource state government.

A cartel could create a lot of havoc around scarcity, once Bitcoin is implemented world wide as a quasi internet currency protocol.

[ElGrandJefe]

Sure we dont at the moment, but that piece above is a long term crystal ball speculation of what one possible future could hold in a world now running on the bitcoin protocol in the same way we buy packets of data, and access to TCP/IP without even thinking about it.

The difficulty acts a bit like a reserve bank in a sense, driving the cost of hashing up so no matter how much hash power there is, the flow of currency minting remains constant.

What happens if a bulk of the hashing power is in the hands of a cartel with central political objectives, after we arrive at that point where the cost of matching their hashing power is only possible by a well resource state government.

A cartel could create a lot of havoc around scarcity, once Bitcoin is implemented world wide as a quasi internet currency protocol.

Ell Oh Ell.

[taipo]

Ell Oh Ell.

R U Ar MiuzD

[taipo]

Estimated Next Difficulty: 16,182,431,779 (+20.20%)
https://bitcoinwisdom.com/bitcoin/difficulty

Crystal ball says the difficulty is going to leap this time, meanwhile the value of BTC is teetering. Anyone have an opinion on that? Or is it still early days on making a call on the potential next leap.

[rograz]

Some of the hashrate that popped up towards the end of last diff surely came from the people who got busted for withholding blocks from pools, add some pools having decent luck the last few days and this diff increase wasn't that bad. Coming month might be the worst we have seen in a while though with KNC shipping, Bitmain releasing S3 and BFL actually delivering something (in two weeks!).

At current diff/btc price we are at the stage when more and more of the network will be taken offline as well, I bet a large part of the early Avalon/Asicminer miners are already taken down and next victim will be all the old BFL gear, wont be a noticeable slowdown until all the S1s start becoming unprofitable however is my guess.

[BetMoose]

Estimated Next Difficulty: 16,182,431,779 (+20.20%)
https://bitcoinwisdom.com/bitcoin/difficulty

Crystal ball says the difficulty is going to leap this time, meanwhile the value of BTC is teetering. Anyone have an opinion on that? Or is it still early days on making a call on the potential next leap.

We could really use your crystal ball on our site - we have a few bitcoin mining bets up but no one seems to really know anything

Also - my prediction is that the difficulty will rise until it's matched up with the price - last I checked miners could still profit at a $140 coin (this was 2 months) so they're probably up to ~$250 a coin now in terms of difficulty increases..

[xstr8guy]

[ takes out crystal ball and places on table - stares deeply into the globe ]

I am a firm believer that it will keep going up in leaps and bounds until the big players 'blink'.

For now they are just staring at each other, going tit for tat, matching hashrates to the difficulty changes. Meanwhile the cost to mine edges closer to the bitcoin rewards mined.

When the cost to mine reaches the point that there is not enough cash left over to upgrade and match the rise in difficulty, and pay bills and workers, then the difficulty rises will drop to a few percent every 14 day revolution and may even stablise.

But the new order of things will be something like the running costs being at about 85% to 90% of total mined bitcoins.

When it gets to that level, it won't change without something catastrophic happening politically, or to the tech or the network itself or the algorithm.

So if you have an Antminer S2 lets say the diff is at 65,000,000,000, BTC at $600, and its costing you about $4 USD per day to run, then you will be mining about $4.70 USD a day with your S2.

This is because the big players, eventually with their 1 PH/s racks would also be paying about $4000 USD a day ( at a guess ) to host those miners while earning a guesstimation of about $4700 USD in BTC per day.

If the value of BTC rises then large miners will afford to acquire even more miners pushing the hashrate and difficulty up and the $$$ gap between cost to mine and reward remaining about the same.

This is pretty much how the game is played everywhere else, in mining BTC it is no different. In particular its the way that China competes in business because many of their businesses can operate at thin profit margins, much thinner than anywhere else.

Eventually manufacturers in China will be the primary producers of miners, and most bitcoin will be mined there, and much of the BTC supply to the market will come out of China.

Around the world, many businesses could still run mining operations as a means of writing off profits, running their businesses at a loss and pocketing the Bitcoins themselves, however dubious that may be, that would be the only way to eventually compete, or at least, stay in the game and make something from it.

Any cartel of large mining operations in China could possibly do some damage to the world bitcoin economy if that all eventuates.

A quick look back at how OAPEC wielded supply during the Yom Kippur War is a good indicator of how supply can be used politically.

Damn near perfect analysis! The only thing I would add is the lag between 'preorder and delivery'.

Because of the extended period of time between preorder and delivery, we may actually witness the point where BTC mining becomes unprofitable for everyone. 100s of PHs could theoretically be preordered and when they are finally delivered, online and hashing, even the most efficient mining operations could be in the red.

I honestly fear that we are dangerously close to this point now. There is a LOT of hashing power coming online in the next few months. I've stopped buying new gear because of this... and also because I keep tripping breakers and my house is effing hot! Lol.

[BTC_Fundamentals]

I sure hope that mining difficulty will stabilize at some point. But if it's a lot of hardware to be yet delivered soon, we have to wait for that a while.

[xstr8guy]

I sure hope that mining difficulty will stabilize at some point. But if it's a lot of hardware to be yet delivered soon, we have to wait for that a while.

There's currently no end in sight to the preorder cycle. And already, with 8 days to go before the next difficulty adjustment, we are looking at a 20% increase. And that will likely continue to grow. 35% wouldn't be an outrageous guess at this point.

[DrG]

We're still dealing with hardware that's using 1W/GH at the wall.  With 1, maybe 2 process levels to go I think we have a long ways to go before seeing 0.4W/GH which will of course come in huge DC configurations made for the big farms who will buy them at 1k orders.  I don't think we'll see a regression until the 2016 halving.

[samsonn25]

I sure hope that mining difficulty will stabilize at some point. But if it's a lot of hardware to be yet delivered soon, we have to wait for that a while.

There's currently no end in sight to the preorder cycle. And already, with 8 days to go before the next difficulty adjustment, we are looking at a 20% increase. And that will likely continue to grow. 35% wouldn't be an outrageous guess at this point.

I think retail demand for asic machines is dropping causing manufacturers to do more pre orders for commercial customers so they have a bigger chunk for r and d.

[nwfella]

Think I agree with DrG here.  I seriously doubt there will be any kind of serious slow down daily network growth rate til at least middle of 2016.  Perhaps not even then if bitcoin is over six or seven thousand dollars a coin.

[taipo]

Mining difficulty needs to now be replaced with profit margins in the minds eye of those trying to understand the continuous rise of the hashrate, which is the real issue here now that mining has become the plaything of early adopters, the rich and the well resourced.

Example: the current profit margin of a miner with 1 TH at 1gh per watt at 0.15 per kW is about a 67% profit margin, give or take variances in cooling costs and kW costs.

When that profit margin across the board gets down to 15%, the hashrate has to stabilise, with the odd burst happening every time the value of BTC rises, or there is a improvement in the TH/kW ratio, until the profit margin returns to 15% again.

[samsonn25]

There is no profit margin now.  Is more about how much of a loss.

1th asic at 1watt/gh needs to be priced at 1100 to break even.  There are no machines there now. The lowest in Stock is 1450 1th.  So now best market deal is lose 30%

[xstr8guy]

There is no profit margin now.  Is more about how much of a loss.

1th asic at 1watt/gh needs to be priced at 1100 to break even.  There are no machines there now. The lowest in Stock is 1450 1th.  So now best market deal is lose 30%

And if ordered now, it will arrive just in time for the next difficulty adjustment. Which is currently at +20% (and rising quickly) with just 7 days to go.

[mikerbiker6]

Mining difficulty needs to now be replaced with profit margins in the minds eye of those trying to understand the continuous rise of the hashrate, which is the real issue here now that mining has become the plaything of early adopters, the rich and the well resourced.

Example: the current profit margin of a miner with 1 TH at 1gh per watt at 0.15 per kW is about a 67% profit margin, give or take variances in cooling costs and kW costs.

When that profit margin across the board gets down to 15%, the hashrate has to stabilise, with the odd burst happening every time the value of BTC rises, or there is a improvement in the TH/kW ratio, until the profit margin returns to 15% again.

67% profit, yeah right.
no money to be made anymore.

[taipo]

67% profit, yeah right.
no money to be made anymore.

Thats how miners that have established rigs are viewing it.

Cost of purchase, ROI are the musings of those looking at getting into bitcoin mining, those trying to talk others out of doing so and those depressed at not having made anything from mining other than buying a crap load of paper weights.

Yes there is no money to be made anymore for new startups who do not have financial backing, and for those that did not expand their rigs ahead of the difficulty shifts.

Some people are making a crap load of money, hence the hashrate, but all are struggling to make the same amount of profit turnaround, and add enough equipment every 2 weeks or so to either maintain their current incomes or to even try to increase them.

Within about 5 to 8 more 15-20% shifts in difficulty, this 67% figure will be about 10% to 15% and therefore beyond the ability for established mining farms to be able to easily add miners at a level staying ahead of the difficulty changes.

Equilibrium will come, but at the expense of many.

Estimated Next Difficulty:   16,847,110,142 (+25.14%)
Adjust time:   After 1264 Blocks, About 7.3 days