Noob question, bitcoin difficulty / profitability, is it linear?

[Monkeys]

Sorry guys, noob question.

I'm new to all this but have been researching it for a few days now and am considering attempting to mine some bitcoin.

What I'm unsure about is whether the difficulty level of bitcoin scales 1:1 with profitability?

For example the current difficulty is 13,000,000 or whatever, and at current profitability I could make say $10 per day profit off "bitcoin miners X" at current difficulty.

So, does that mean that when difficulty doubles, reaching 26,000,000, that my profitability would halve to $5 per day (assuming all other prices remain the same of course).

Is this correct? Some sources I've read seem to suggest that it's not a 1:1 relationship and that if difficulty doubles then profitability does not half but rather decreases by 25% or so.

Thanks in advance =)

[dogie]

It would also half. Ignoring power costs, which are fixed to $.

[tmobileguy]

Sorry guys, noob question.

I'm new to all this but have been researching it for a few days now and am considering attempting to mine some bitcoin.

What I'm unsure about is whether the difficulty level of bitcoin scales 1:1 with profitability?

For example the current difficulty is 13,000,000 or whatever, and at current profitability I could make say $10 per day profit off "bitcoin miners X" at current difficulty.

So, does that mean that when difficulty doubles, reaching 26,000,000, that my profitability would halve to $5 per day (assuming all other prices remain the same of course).

Is this correct? Some sources I've read seem to suggest that it's not a 1:1 relationship and that if difficulty doubles then profitability does not half but rather decreases by 25% or so.

Thanks in advance =)

Yes..as noted above...it would half, but profit would not lower by the same amount because fixed costs like electricity would stay the same....so profit would actually decrease more since your expenses would take up a larger percentage of your revenue...

What they are probably referring to is difficulty percentage jumps are not equal to revenue loss...meaning that if difficulty jumps 25%, revenues do not decrease by 25%, they decrease by 20%....example, difficulty of 10m goes to 12.5m....10m/12.5m is 80% of the previous revenue, or 20% loss of revenue...

[Monkeys]

Ahh ok I think I understand now.

So if in say one year, the difficulty doubles from 10 million to 20 million, a 100% increase, profitability (ignoring power costs) would then decrease to 50% (10/20 = 0.5).

Another example, if it increases from 10 million to say 45 million, profitability would decrease to 22% (10/45 = 0.222*).

Correct?

[xstr8guy]

Difficulty is currently at 13.4 billion... That's billion with a "B". Not sure where your pulling these million numbers, lol.

I guess you're just being hypothetical. But still, you might want to adjust your figures so you don't look so super-noobie.

[mgio]

Ahh ok I think I understand now.

So if in say one year, the difficulty doubles from 10 million to 20 million, a 100% increase, profitability (ignoring power costs) would then decrease to 50% (10/20 = 0.5).

Another example, if it increases from 10 million to say 45 million, profitability would decrease to 22% (10/45 = 0.222*).

Correct?

Yes, that that is correct.

It currently rises at roughly 15% every two weeks though which is waaaay more than 100% a year.

[ALToids]

This is why the earnings in the first month of mining are so important.  If you have downtime or delay getting your miner up you will have lost significant profitability.

[xstr8guy]

Ahh ok I think I understand now.

So if in say one year, the difficulty doubles from 10 million to 20 million, a 100% increase, profitability (ignoring power costs) would then decrease to 50% (10/20 = 0.5).

Another example, if it increases from 10 million to say 45 million, profitability would decrease to 22% (10/45 = 0.222*).

Correct?

Yes, that that is correct.

It currently rises at roughly 15% every two weeks though which is waaaay more than 100% a year.

Just wanted to add... Difficulty adjusts every 2016 blocks not every 2 weeks. If the network hashrate is increasing then difficulty adjustments happen much quicker than every 2 weeks. 10-12 days between adjustments is not uncommon.

[thew3apon]

This is why the earnings in the first month of mining are so important.  If you have downtime or delay getting your miner up you will have lost significant profitability.

Agree, and manufacturer likes to use the first month for testing.

[DrG]

This is why the earnings in the first month of mining are so important.  If you have downtime or delay getting your miner up you will have lost significant profitability.

Agree, and manufacturer likes to use the first six months for testing.

Or if you're BFL you fake incompetence assembling a PCIe mining card while shipping the chips off to an outside company who uses said chips to mine away with.  Funny how they make a batch of chips and then they all disappear.