Topic: linearity in profitability calculations - page 2. (Read 3252 times)

Thanks for the answers for everyone.


I think I've got it.  What really matters is my relative hashing power to the hashing power of the whole world.

If I mine in a pool and I double my hashing speed, I end up with a bit less than 2% (1,98% as bcpokey showed us in his example) of the hashing power of the pool.  On the other hand my pool's hashing power is now bigger (it is a little bit more likely to mine a whole block for my pool with my doubled power), so we all in the pool share a bit larger portion of the pie, so I will earn more than 1,98%.  I think it shouldn't matter that I mine in a pool or solo because of this.  So at the end of the day what really matters is my relative power to the whole world's power.  (...and not my relative power to the pool.)

To answer my own question:  I won't earn exactly double amount of BTC when I double my hashing speed, and the reason is the same why 1,98% is 1,98% and not 2%. The whole world is just a much larger pool than my mining pool.  What matters is the ration of my hashing speed to the whole world's hasing speed, but if I double it, it'll be still a bit less that double.  For instance if I would have 0.00001% of the hashing power of the whole world, and I could double it, I would have 0.00002 / 100.00001 (that is ~ 0.000019999998%).  The smaller my initial speed is before doubling, the closer I will be to the double income.

That'a why I stopped extrapolating difficulty and such things.  The base of my new calculation is that I must extrapolate the overall hashing power of all miners on the Earth (it should be an exponential curve because of the improving technology and improving popularity of bitcoin mining).


gives me a ratio that is easy to use to calculate the amount of BTC I can earn. (I must calculate it as a monthly, weekly, maybe daily average.) If X is the amount of BTC that can be mined in, for instance, 24 hours, and r is the average ratio for that day, then r*X is the average amount of BTC I'm gonna earn on that particular day.  (Of course it's not exactly the amount I'm going to earn because of fluctuation in the earnings, luck, etc., but the sum of these amounts over a future period should be quite correct in the long run, as long as my guess is good and the overall hashing power used in the valvulation is close enough to the real.)  The value of X is an easier one.  Suppose the world can mine a block in every 10 minutes, and the block reward is 25 BTC on that day, so the daily maximum is 24 * 60/10 * 25 BTC = 3600 BTC, and it will be 3600 in the next 4 years.

What I want to say is that I think there's no need to calculate anything else for a future period that the overall hash rate of the world.  That's the only value worth guessing for profitability calculations.  I would like to know if you see it in another way.

With your 1.98% example, aren't you contradicting yourself? Doubling your hash power does not double your earnings because a) 1.98% is not the same as 2.00% and b) the difficulty will increase to "match" the new total network hash rate.


I fast read / misread this as "When the reward is halved, ..." and gave a response to that question. It just happened that the correct answer is also Yes, but for different reasons.

Well, that's not really right, which is why I phrased my answer as I did earlier. To explain why your explanation isn't wholly appropriate think of it as follows:

Imagine a pool has 100 Hashing units, you control 1% or 1 hashing unit. You then double your hashing power, to 2 hashing units, giving the pool a total of 101 hashing units. 2 / 101 * 100 = 1.98% or essentially 2%.

It only breaks down when you are a significant fraction of a pools total hashing power, at which point it is quite unlikely you will be doubling your hashing power at any rate.

No it won't. Assuming you're mining in a pool, double-ing your hash rate will only double your earnings if someone else takes the same amount of power offline in order for the total hashrate to remain constant. Think of it like this: in a day your total BTC = YourHashrate / TotalHashRate x daily mined BTCs. Since the daily mined BTCs are pretty much constant ... you got the idea. This happens because the difficulty adjusts to total hashrate.


Yes. I would phrase it like this: half as many BTC can be mined in a given time period (i.e. 24h). There will be some variation until difficulty adjusts to the ASICs, but once the diff stabilizes ... you got the idea.

Definitely a good post. It's very refreshing to see a new poster asking for potential flaws in their calculations instead of proudly describing their 12 month projections.

The short answers to your questions are yes to both.

The real questions are:

1) how are you going to double your speed? I would discuss all the difficulties involved with scaling up GPU mining operations, but since it's about to be completely irrelevant, I won't bother.

2) Are you aware of how much difficulty has been increasing over the last 5 months? While not any kind of ceiling on future difficulty increases, it should at least expose you to some issues in making profit projections any farther than 12 days into the future.

When ASIC machines start being delivered, they will make all our recent difficulty increases look trivial.

Good post ^. I'd also caution the OP to heed the reward halving coming early next month. It's likely to lead to changes to the fiat/BTC exchange rate and mess with everyone's profitability models.

The amount of BTC you earn depends on the method of mining you choose, are you doing Solo mining? Are you mining on a pool? Is the pool PPS, is it proportional? Is there a fee? Etc.

Pay-per-share is the only one where you can say that your BTC earned doubles when you double your mining speed (until they change the amount they pay per share of course). Other methods typically depend on what proportion of the mining power you generate (and some luck as well). For most small time miners however, doubling your hash power will effectively double your earnings, assuming other factors remain the same.

When difficulty doubles, you will earn roughly half as many BTC, that one is more cut and dry.

So the answer is "yes" with a buncha caveats. Difficulty changes constantly, as others in the mining game add or subtract their relative hashing power.

I suggest that you pay close attention the the ASIIC discussions going on, as that has a huge impact on profitability, whether you are GPU farming, or jumping on the ASIIC bus as well

Hello,

I'm just planning to start mining and trying to do the maths before it.
While I was trying to figure out my future profit, I realized that I use
a few assumptions that are not necessarily true.  Two of them:

1) I've measured that with X Mhash/s speed I earn Y BTC/week.  Now
I'm not sure that if I can double, tripple, etc. my speed, then my
earnings will double, trippe, etc. of Y.  Is that true, that if I would
have been mining with k*X speed, k*Y BTC have been earned?

2) When difficulty doubles, half as many BTC can be mined.

Well, these are the basics of my calculations, but I'm not sure of them.
I would like to know your opinion on the above two points.

THX