Whats causing the estimated Difficulty jump to 6B?

[GigaWave]

Looks like another 5000TH has been added over the last few days....crazy.

[kendog77]

Looks like another 5000TH has been added over the last few days....crazy.

If miners behaved in a sane manner, they would stop buying mining hardware until the price of BTC recovered and the hash rate would level out a bit from here since the price of BTC is in the toilet.

I have my doubts that miners will behave in a sane manner, however.

[precrime3]

Big time miners will have to keep mining to pay the bills or shutoff ASICs I believe so hash rate won't decrease that much I would imagine :p

[highbit]

The difficulty increase is a reaction to the network hash rate and since it computes looking back two weeks, it always lags. It is supposed to keep the average time between blocks around 10 minutes, but in all of 2013, it was around 8 minutes, so it is still lagging. When I ran the numbers, it was amazing to see a bi-weekly average of 34% growth for the network hash rate for 2013. 

The conventional wisdom is that at some point the "Law of big numbers" will take hold and we won't see the kind of growth in hash rate we saw in 2013.  I read another poster on another forum make this case and it was also put forward by Emmanuel (CEO of cloudhashing.com) at the https://www.youtube.com/watch?v=JkBu5_hZgWI Coinsummit conference in San Francisco last week. And the numbers seemed to be slowing down, but in the last 2 days the network hash rate has crossed 50 PetaHashes from a low of 37 PetaHashes which is mind-boggling.

Even though HighBitCoin is in the business of building 1+ PetaHash data center ready systems, it is difficult for us to explain a swing of 5-10 Peta Hashes in such time frame. With the exception of Bitfury which has gone dark, we know all the major ASIC mining hardware companies out there and roughly what the supply side of the equation looks like. 5 PetaHashes of network capacity is a huge data center with over 200 racks of systems and to see that kind of capacity switch on/off seems crazy.

A lot of what I did in my past life was analyze data and provide insights, so this aspect of the network hash rate troubles me. Leaving aside who is behind this increase, a few questions come to mind:

1. Do we trust the data (charts on blockchain.info and other places) and assume this wide fluctuation in network capacity is real?
2. Individual miners wouldn't act in concert to cause this massive increase/decrease in capacity. We are seeing a massive increase even though the price of bitcoin has dropped in the last few days, so I wonder whats behind sudden large increases in 48 hours as opposed to a gradual increase?
3. What is the incentive for even large scale miners to take their capacity offline especially when the price of bitcoin is not going down? (unless it is just before the timed increase of difficulty). There seems to be a weak correlation between hash rate and BTC price


Look forward to theories, speculation or ideas to help understand what's going on...

thanks for reading
Prakash
http://highbitcoin.com

[samsonn25]

The 5 to 10 PH spike is probably the antminer s2  coming online and finalizing testing.  6000 to 10000 units would not surprise me.

[precrime3]

The 5 to 10 PH spike is probably the antminer s2  coming online and finalizing testing.  6000 to 10000 units would not surprise me.

I don't think bitmain made that many units in the first two batches.... Would definitely be a surprise to me....

[ujka]

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1. Do we trust the data (charts on blockchain.info and other places) and assume this wide fluctuation in network capacity is real?

Charts data on blockchain.info is based on number of blocks found, not on the hashrate of the hardware (or pools).
Very lucky period for some big(er) pool, or few of them, can influence charts very much.

I tracked Eligius for few days at end of March: with realtime hashrate reported on stats page Eligius should mine 22 blocks per day, and there were days with 27, 29, 30 blocks.

When such string of lucky days happens on some even bigger pool, we can see that wide fluctuation.

Green line on the chart at https://bitcoinwisdom.com/bitcoin/difficulty doesn't have any wide fluctuations - that's charted hashrate based on 2016 blocks found - any wide fluctuaction averages out.

[samsonn25]

The 5 to 10 PH spike is probably the antminer s2  coming online and finalizing testing.  6000 to 10000 units would not surprise me.

I don't think bitmain made that many units in the first two batches.... Would definitely be a surprise to me....

They made enough s1 to push 20% of hashrate when it was 30+  Thats alot of antminer s1 lets say 6 to 7 ph. 33k to 38k machines. Batch 1 pre orders shipped  2nd batch this week about 3-5k machines for those two. alone.  And alot extra for the public launch. and building 3xtra ones on the side.

I believe they can ramp up design and manufacture faster than any other company to push out products.

[highbit]

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1. Do we trust the data (charts on blockchain.info and other places) and assume this wide fluctuation in network capacity is real?

Charts data on blockchain.info is based on number of blocks found, not on the hashrate of the hardware (or pools).
Very lucky period for some big(er) pool, or few of them, can influence charts very much.

I tracked Eligius for few days at end of March: with realtime hashrate reported on stats page Eligius should mine 22 blocks per day, and there were days with 27, 29, 30 blocks.

When such string of lucky days happens on some even bigger pool, we can see that wide fluctuation.

Green line on the chart at https://bitcoinwisdom.com/bitcoin/difficulty doesn't have any wide fluctuations - that's charted hashrate based on 2016 blocks found - any wide fluctuaction averages out.

Thanks for the clarification. Did some more research and you're right about the chart data. Was hoping there was more data available, but the network hash rate is mostly derived from the only metric that is public: Avg. time between blocks mined, which can vary quite a bit on a daily basis.