Topic: ETH Difficulty +11% in less than 24 hours. - page 5. (Read 12933 times)

Increasing difficulty and hashrate growth have virtually no effect on how many new eth are created.  The system is designed such that the block time averages around 15 seconds.  More miners with more hashrate find solutions faster which causes an automatic increase in difficulty to try to maintain the average 15 second block time.  So regardless of how much hashing is going on and how high or low the difficulty, blocks are solved at roughly the same rate so the amount of new eth produced is the same.

This is a direct result of the ice age, which some months ago was explained quite well.

Look at hash rate charts vs difficulty charts   https://etherscan.io/charts

over the past month hash went up 66% but difficulty went up 95%

In the future it will become much worse

I absolutely understand , and agree.

But the problem is multi side.

We should consider from a economical view too and not just mathematical.

My question is : with the difficulty and hashrate growth, is there more ETHS created than before ? less ? or the same ?

(That's something I don't know, havent made my research yet. But sure you will tell me)

I know that in FIAT world , more a money is released , less it is powerful.
But if there is less money/coin creation, it become more "rare" and price should increase.
And this kind of laws work everywhere, FIAT , tokens , coins , goods , trades..

(Sorry for poor translation)

This is entirely predictable and expected.  Everyone and their cat are running out and buying up every GPU that can hash.  More hashing will increase difficulty.  Nothing unusual or unexpected.  Lots of people eager to build a money making machine and desperately afraid of missing out.  Last year very few had heard about this stuff.  Now cryptocurrencies have been getting a lot of press and word of mouth and it's taking off big time.  The result is heaps of new miners coming in with the inevitable result being rapidly increasing difficulty.

It's hard to imagine how anyone starting out now will ever make a profit. (unless they have really cheap electric)

even 1050Ti's are getting bought, by this rate I imagine there won't be literally no new gpu left on this planet to buy by the end of July...

Ok that's the first attempt at a rationale I've heard.  It's not correct but it's good to see someone trying...

The problematic assumption is in assuming miners are more or less likely to hold if they get more or less coins.  You seem to suggest if a miner gets more coins he will sell but if fewer coins he will hold.  I really don't see that happening at all.

In fact if you look at eth price and difficulty in may, you see the difficulty increases AFTER the price rises, not the other way round.  If you look at any coin on whattomine.com, over a period of days, you will see the more profitable coins tend to get larger increases in difficulty the next day, due to more miners pilling on.  The increasing difficulty, reduces profitability and so they switch to another coin and so on.  This is why the most profitable coins in the league table are in constant positional flux.  The herd moves from one to another, and every time they move, difficulty goes up in the coin they move to and so the next day they move on.  It's also why difficulty goes down.  When enough miners move away from a coin, the difficulty has to reduce as the confirmation time increases.

You guys know way more than I do. Maybe it is an ASIC machine, maybe not - but something is clearly happening because the difficulty rate is increasing exponentially and there a lot of weird happenings (iceage, backlogs, difficulty rate increasing 11% in one day, etc.)

In my experience when you have this many weird things happening all at the same time - something fishy is going on.

I will point out that I'm seeing a trend across the board with video cards that I would not normally consider. People are buying up 460s, 560s, 1060s and even 1070s to try to jump on the band wagon. It's almost like stocks, there are always a bunch of people jumping in at the last minute only to lose money when the floor drops out from underneath them. People are getting desperate and buying other cards to try to make money and to chase that difficulty level.

Because when diffulcty grow, the miner get less coins.

If miner is not stupid, he will hold. (generally he want to earn the most, so he has no interest in selling his mined coins for cheap)

If most miners hold, supply is low.

Offer/demand law => low supply = price will rise.

Of course it's not so simple (not all miners have the same strategy), but that is the idea why we think difficulty will bring price growth.



I personnaly think that now that people tasted ETH @350+ USD , they won't be very interested to sell for cheaper, and many will hold in expectation for new rises. That's not sure , but I think so.

I would love to hear how that works!  By what mechanism, (besides wishful thinking), can people mining a coin cause the price to rise?  I don't know how many different ways I can explain this... It's really not complicated...

Difficulty is solely and entirely determined automatically and periodically to try to maintain a constant and fixed confirmation time.  When more hashrate power is applied to a coin e.g. more miners mining it, confirmation times start to shorten which causes the difficulty to increase automatically to try to maintain the same confirmation time.  It has absolutely no relationship to price.  The price is not involved in the calculation.

So we have established there is no mechanical or mathematical relationship between difficulty and price.  The only other way, might be if investors saw a rising difficulty and took that as a reason to buy more coins.  But it begs the question why the heck would investor care what the difficulty is??  I can't imagine investors look at mining difficulty at all.  It's just not relevant as it bares no relation to present or future price movements.  All an increasing difficulty suggests is more miners are mining it.  All that means is that it is more profitable to mine, usually because it has had a rapid run up in price.  Now investors are interested in price movements but why would they look at an indirect imprecise indicator of price action (mining difficulty) when they can glance at any historical price chart?

Anyway, I'm hoping someone can prove me wrong and demonstrate a distinct correlation between mining difficulty and price.  I can't imagine how that might work but I try to maintain an open mind

That is incorrect, mining does not create higher demand, only higher demand of hardware.

Money comes from investors not miners.

I agree with that. When more people mine it, the price will go higher.

You need to do a little more research methinks.  Mining difficulty has absolutely nothing to do with the price.  I have no idea if the eth price will go up or down or move sideways.  But the greater the difficulty, the fewer coins you will receive for whatever hashrate you can generate.  More miners = rising difficulty = fewer coins per mining hashrate.  With more miners mining a coin, the difficulty automatically rises.  If the price happens to rise at the same rate then profit will stay the same but if the price does not rise (and bear in mind difficulty and price have no direct relationship), then profit will fall.  Because you will get fewer coins for the same hashrate and if such coins aren't worth more then your profit must be less.


I'm not being pessimistic at all.  Just stating plain facts.  No guessing, no speculating.  There is no evidence of a link between difficulty and coin price.  More miners mining a coin will not cause the price to rise nor will it lead to the coin garnering more support.  Or at least there doesn't seem to be any reason for such.

You need to look at this a little more skeptically, with an open mind and a better understanding of what drives difficulty.  There is no human hand controlling the difficulty, it is automatically adjusted periodically to maintain an average confirmation period.  If more miners are mining it, solutions will be found faster which in turn will automatically cause the difficulty to rise.  This has no relation to the price.  Except of course miners look for the most profitable coins to mine so a rapidly rising coin with have greater profitability, which will draw more miners, which will increase the difficulty, which will reduce the mining profitability (unless the coin continues rising rapidly).  The past couple of months have only been unusually profitable because the coin prices have shot up so fast.

I think I understand now why some people are so optimistic.  It's because you don't really understand how mining difficulty works.  Points to ponder:

1. Mining difficulty is mathematically adjusted periodically to try to maintain a constant confirmation time.
2. There is no human involvement.
3. Price bears no relation to difficulty.  Increasing difficulty, does not affect the price and increasing price does not affect the difficulty.  At least not in any direct way.  Indirectly, increasing price draws more miners to mine that coin which will cause a consequent increase in difficulty.  But changes in difficulty have no affect direct or indirect on price.

I hope this has been educational.

I don't understand why people say the Eth price will crash due to higher hashrate and diffuclty.

If ETHs are difficult to get (to mine), won't their price grow up ?

I just don't understand this kind of weird pessimism when you look at the history of cryptos. Everything does not revolve around Ethereum. A coin's difficulty/profitability is directly linked to a coins support and real world use. Why do you think ETH became so profitable? Because big players put big money into it, supporting it's development and adoption. The fact that it switches to POS is a different story altogether, but point is, if nobody was mining it, it sure wouldn't be where it is today.

If miners switch to another crypto once ETH tanks (if it does), then that coin will/might gather support, potentially getting a lot of attention from investors. Difficulty will rise, but that does not always mean profitability will tank, this is exactly what happens with ETH. I can see this happening with a lot of minable coins. And again, I might be a complete idiot with my blind optimism, but if ETC for example hits 100$ a coin, I'll be lmao. It's just a matter of gambling on the right coin.

Also, your "circle of doom" doesn't just happen in 2 weeks. It took ETH 2 years to get to the point where difficulty is becoming an issue AND they are artificially making it harder to mine to switch over to POS. This is plenty enough time to buy hardware and do your ROI.

I mean I don't get it, is you have such a doomed and pessimistic view of this, why are you even here? All cryptos are eventually going to be impossible to mine anyway, but that's just part of the game. Just enjoy it while it lasts.

This is what I don't understand.  This kind of blind optimism divorced from reality.  It is not speculation, it is a logical certainty that once eth profitability tanks, so will all the other cryptos.  It's really really simple.  It goes like this:

1. Most crypto miners are mining eth but..
2. When eth is no longer profitable...
3. They will switch their machines to mining any other crypto that are profitable, leading to...
4. Massive increase difficulty, resulting in...
5. Profits falling off a cliff.

I'm astounded how anyone can not understand this. 

And what you think will happen with difficulty on other coins when all that hardware from eth switch to them?You really think you will have current profit on etc?

Kompik's quote was just in reference that amd eth miners are plenty able of mining ZEC (or its clones) as it has similar hash to gtx 1060.

They are not just going to 'give up' and stop mining.

Funny, this is what people say every time something big is happening in the crypto world, "don't buy gear or you'll go bankrupt".

Last time this happened was with ZEC, when it kept losing value because it was waaaay over-valued. Everyone was saying "haha look at those noobs buying 6 card rigs, good luck getting your money back with this scam coin". Then it hit rock bottom, and now? It's back in the 350-400$ range. And I bet all those who built and bought rigs for ZEC are pretty happy they did today, with the GPU shortage, even if they aren't mining ZEC. I know I am.

I'm not trying to influence anyone's decision to stick to ETH or not. This is all a giant gamble. Maybe I'm the one who will crash and burn buying new gear (though I'm not one paying for overpriced cards). All I know is that I did my ROI a while back and you gotta be fast in this world, and sticking to mining one single coin like ETH isn't the smart move.

But hey, good luck to you too right? 

Oh man you really dont understand that this is all one interconnected market, saying I dont mine ETH, so it will not influence me is the dumbest thing ever. Good luck buying new gear and going bankrupt with this attitude.

WTH are you talking about?...

ETH is just one coin that currently is the most profitable, but others are close behind. There are tons of other coins that will still give a nice profit. Everyone seems to be so scared about ETH becoming more difficult to mine or whatever, but the age of cryptos has really just begun.

I don't give 2 poops about ETH dying off with their idiotic difficulty bomb and artificial difficulty increase to force people to leave before they switch to POS(hit). I'm actually hoping every miner will leave to better things soon and let ETH crash and burn (or maybe rise and shine). Personally, I don't see POS as a good thing for the ethereum network and I don't see how it will make it better as you'll just have a few large players buying up all the coins to get the work contracts. Maybe the price will rise to 1000$, maybe not. I'm holding some, but will be switching to ETC today, just waiting on my next payment...