Difficulty increase - 60%

[SgtSpike]

Blocks per hour before the difficulty change: 12.5
Blocks per hour after a 60% increase in difficulty: 12.6

Can someone explain to me why there was essentially no change? Shouldn't the number of blocks per hour immediately drop by a significant amount, and then recover?

I think it uses some sort of moving average.  Maybe a 24 hr average.  So over the last 24 hrs, there has been 12.6 blocks/hr found.  We should see that number drop in the coming hours, and even out to the new blocks per hour average after a day or two.  Alongside of that, the difficulty ratio will also change, since the difficulty is ultimately determined by how many blocks/hr are found at the current difficulty level.

[1715297754]

1715297754

[SlaveInDebt]

Where on earth is all this new hardware coming from?

Seti@home recently took a hit, I think. And I'm sure there are F@H people mining with nVidia as long as the exchange rate makes it worthwhile.

Why does it make you unhappy? Yeah, I like easy money too, but I would much rather see the Bitcoin network grow as strong as possible.

I forgot about SETI shutting down. Not really unhappy just rather hot
Double the hashing power in 3 weeks is quiet amazing is all and Im not objecting to it just curious where it all came from.
Im all for Bitcoin succeeding for many reasons on a global scale and for myself. The current economic system has put a hurting on me.

[bitlock]

I've been running about 500 MH/s for about a month - as soon as I can convert enough bitcoin, I'll probably be doubling that with another card, hopefully in a few weeks - if bitcoin prices hold, I'll add more as funds arrive - got the space, the juice and a cool room... it's a no brainer....

[JJG]

I've been running about 500 MH/s for about a month - as soon as I can convert enough bitcoin, I'll probably be doubling that with another card, hopefully in a few weeks - if bitcoin prices hold, I'll add more as funds arrive - got the space, the juice and a cool room... it's a no brainer....

Are you sure about that? We just had a huge jump in difficulty. If it continues, two weeks from now your bitcoin production for a given Mhash will be ~30% of what it was yesterday (before the increase). Even then, that value will only hold another 10 days before it falls again.

[Laereom]

I'm not sure what people were expecting.

Even after this difficulty increase, annualized ROI of slapping a new video card in an old system and sticking it on deepnet is somewhere between 500 and 650%.  Bitcoin has a very efficient and open exchange system.  I'd be surprised if mining difficulty didn't increase at a rate of 50+% every two weeks until we're down to a more reasonable ROI, not adjusted for risk, of 10-30%.  That's another 4-7 increases of 50+%, assuming bitcoin prices don't dramatically increase to compensate...in which case, it will last even longer.

[kjj]

I'm not sure what people were expecting.

Even after this difficulty increase, annualized ROI of slapping a new video card in an old system and sticking it on deepnet is somewhere between 500 and 650%.  Bitcoin has a very efficient and open exchange system.  I'd be surprised if mining difficulty didn't increase at a rate of 50+% every two weeks until we're down to a more reasonable ROI, not adjusted for risk, of 10-30%.  That's another 4-7 increases of 50+%, assuming bitcoin prices don't dramatically increase to compensate...in which case, it will last even longer.

How about after the next one, and the one after that, etc?  Are you including the shortness of the retarget cycle into your projections?

I just picked up a bunch of capacity at the alarmingly good rate of 1.7 Mhash/sec per dollar.  I don't expect to ever get that money back.  I actually think that the magic day of no return was a couple of weeks ago.

Then again, if the exchange rate improves, which I find highly unlikely, new gear purchased today could still pay off.  Maybe.

[mouser98]

Double the hashing power in 3 weeks is quiet amazing is all and Im not objecting to it just curious where it all came from.

hmmm, double the hashing power in 3 weeks... cannot find 5850s anywhere....  can the two be connected?

[Laereom]

I'm not sure what people were expecting.

Even after this difficulty increase, annualized ROI of slapping a new video card in an old system and sticking it on deepnet is somewhere between 500 and 650%.  Bitcoin has a very efficient and open exchange system.  I'd be surprised if mining difficulty didn't increase at a rate of 50+% every two weeks until we're down to a more reasonable ROI, not adjusted for risk, of 10-30%.  That's another 4-7 increases of 50+%, assuming bitcoin prices don't dramatically increase to compensate...in which case, it will last even longer.

How about after the next one, and the one after that, etc?  Are you including the shortness of the retarget cycle into your projections?

I just picked up a bunch of capacity at the alarmingly good rate of 1.7 Mhash/sec per dollar.  I don't expect to ever get that money back.  I actually think that the magic day of no return was a couple of weeks ago.

Then again, if the exchange rate improves, which I find highly unlikely, new gear purchased today could still pay off.  Maybe.

Here's my rationale, and note that I specifically was talking about putting a new video card in an old system:
1.  The difficulty increase of 60%, by itself, does not mean hardware won't be profitable.
2.  If we extrapolate this difficulty increase out indefinitely, however, it does.
3.  Because of this, people are going to let off putting in new hardware, which will moderate the difficulty increases down to somewhere in the 20-40% range within a cycle or two.
4.  At that point, we will have reached a 'reasonable' return for a risky venture in the area of 10-30% annually.

I misspoke saying that they would increase at 50%+ every two weeks for some time.  I think it's more likely we'll see one, maybe two more increases at that rate, then slower, but significant increases for the foreseeable future thereafter.  That's what it will take to get bitcoin mining profitability in line with ventures of comparable risk.  However, this most recent difficulty increase should not have surprised anyone, given how much more coins cost now than they used to.

[Zibbo]

Here's my rationale, and note that I specifically was talking about putting a new video card in an old system:
1.  The difficulty increase of 60%, by itself, does not mean hardware won't be profitable.
2.  If we extrapolate this difficulty increase out indefinitely, however, it does.
3.  Because of this, people are going to let off putting in new hardware, which will moderate the difficulty increases down to somewhere in the 20-40% range within a cycle or two.
4.  At that point, we will have reached a 'reasonable' return for a risky venture in the area of 10-30% annually.

I misspoke saying that they would increase at 50%+ every two weeks for some time.  I think it's more likely we'll see one, maybe two more increases at that rate, then slower, but significant increases for the foreseeable future thereafter.  That's what it will take to get bitcoin mining profitability in line with ventures of comparable risk.  However, this most recent difficulty increase should not have surprised anyone, given how much more coins cost now than they used to.

This is exactly what I think will happen as well eventually. However, with the current crop of miners, I predict that difficulty increases will level of way before we reach the level of 10-30% annual returns, because many are in it for a quick buck, and don't realize that something like 30% ROI annually is actually a pretty damn good investment. But like you said, difficulty has still a lot of room to grow before we reach that point.

At some point in far future mining will be saturated with miners who are in it for a long haul, driving the profitable hash/W ratio higher and higher. There may come time, when FPGA/ASIC miners are the only game in town.. Not for a while though.