Topic: Bitcoin future Difficulty level (Read 294 times)

It's important to understand that there is NO algorithmic relationship between BTC price and difficulty. IIn my experience it's a feedback loop driven by the people that own and operate the mining hardware. When BTC price is high, or growing, people that own and operate mining hardware will try and acquire more Bitcoins. They do this by purchasing additional hardware (if it's available), or continuing to operate hardware that isn't all that efficient (but is likely all paid for).

If BTC price were to fall to $5000, withing a month you would likely see a decrease in difficulty. The folks with the lowest electricity price and most efficient hardware will just keep running and hope for an increase in BTC price and/or a drop in difficulty. Miners with high operating costs (i.e. high electricity prices) will be the first turn off thei hardware if it becomes to costly to operate. They may well wait a while to see if the price recovers, and then turn things back on. It's all driven by the psychology of 1000's of individuals (or companies), and what their current investment is in mining hardware. The total hardware investment in BTC mining is now huge, and nobody will quickly discard that hardware until they are convinced it won't pay off sometime (or they are forced to by economic circumstances).

Right now, the prevailing psychology for BTC price is "up, up, and away".

So say the price of BTC plummets to under 10 or even 5k and stays there for several weeks. Would difficulty go down?

Also say miners started pulling the plug temporarily because the price plunged. Would less mining in combination with the price being down also bring difficulty down even more so than price alone?

The one I was talking about was for the interval that just happened a couple hours ago. There aren't any longer term models that I know of, they probably wouldn't be of much use anyways since difficulty can go up and down based on things models can't calculate well anyways (actual chip production, price, etc).

Hello Leowonderful,

Thank you for the new link relative to difficulty rates etc. When you stated a 19% increase, is that for the upcoming 2 week interval increase scheduled for 12-18-17? Do you know of any predicted difficulty models that are looking at say a 6 or 12 month average increase in difficulty rate going forward?

Thanks!

Tsalmins, Thank you for the link and explanation of how you calculate the adjustment.

Leowonderful, Thank you for the new link to look into.

Bitcoinwisdom has and had been flawed for several weeks now, possibly due to the way they collect their data. They used to have legitimate and accurate difficulty calculations but not anymore. BTC.com does provide difficulty information and future stats, as well as difficulty periods in the past and how much difficulty changed during those times. It's predicted right now to be around a 19% increase.

TL;Dr bitcoinwisdom is broken ATM and no longer accurate. You need another source.

I am going to assume you are mining Bitcoin? If you take the past six months difficulty rate data and average it on a daily basis it works out to an increase of 0.4527678% per day. That pencils out to a 165.23% increase when applied to the next 12 months. The difficulty rate for BTC adjusts every 14 days, so 26 times per year. This being said, BTC would have to increase at this rate as well to maintain current payouts. If BTC increases at a higher rate than the difficulty rate increases like it is currently doing then the payouts get better. The opposite is true if coin prices go down and difficulty goes up. You would then have a "double negative" effect. The percent difficulty rate is a direct percent to USD value. If the difficulty rate goes up say 20% and the BTC value did not, then you would be earning 20% less than before the increase.  It would be impossible to project an exact difficulty rate moving forward but using the most recent 6 months data provides an estimate that should offer some degree of accuracy although nothing is perfect.  I have attached a link that will give you all of the data relative to difficulty rates below. It also provides a historical rate charts for LTC and BTC that should be helpful.

https://bitcoinwisdom.com/bitcoin/difficulty

(Moderator note: This post was edited by frodocooper to fix broken formatting.)

Does anybody have realistic difficulty level projections? I saw a chart one time explaining how every 3 months the difficulty level will adjust. The calculators I found online have not been accurate.
When I first started mining in July my payout decreased 25-30% in 2 weeks but has been steady since. I am considering buying more hash power but am concerned about future adjustments.