Topic: Network difficulty up, mining profits down by 15% in 24h – Will it recover? (Read 348 times)

One other little aside on difficulty changes. As stated above, it's every 2016. If it takes 14 days exactly, there is no change in difficulty. If it take less than 14 days difficulty increase, relative to how much less than 14 days. The increase is larger if 2016 blocks are completed in 12 days than 13 days. Conversely, if it takes 16 days to complete 2016 blocks, it drops more than if it takes 15 days.

The net effect of this is: Difficulty rises faster than it falls.

Difficulty adjustments are well understood and well defined. It's unpredictable because folks adding hash rate and removing hash rate. There is some element of luck for individual block solve times, but over many thousands of blocks, that all tends to even out.

What is completely unpredictable (IMHO) is what the BTC speculator in New York is willing to pay for 1000 BTC in the hopes that it will go up. That is what moves prices and influences peoples psychology on mining.

Here is the best calculator to use. It allows you to put in a difficulty rate and other variables. With some time using and examining this calculator it will give valuable information. The difficulty rate changes every 14 days or so, so 26 times per year. The target time to solve a block is 10 minutes. If that target time exceeds 10 minutes within the 2 week cycle, the difficulty is raised to a level that hits that target. If the time is less than 10 minutes in the 2 week cycle the difficulty rate is decreased. The link below will also provide you with a lot of information relative to stats, historical data, next difficulty increase projection etc.

The more miners entering the market the higher the hash rate becomes. This means blocks are solved faster (under 10 minutes) thus pushing the difficulty rate higher. The last 2 rate increases we had were on 12-6 at 18.11% and on 12-18 at 17.74%. The next difficulty adjustment will occur on or about 12-30 with an expected increase of 18.50%. This being said, if the next increase is 18.50% we are tracking an 18.12% average difficulty increase every 2 weeks! If that were to continue we will see a 471.12% difficulty increase in the next 12 months. The BTC price is directly correlated to the difficulty increase. In order to maintain current payouts the price of BTC has to mirror the increased difficulty rates going forward. If the price exceeds the difficulty rate increase we see an increase in payouts. That is exactly what has been happening lately. This price surge is bringing on more new gear ans some gear that was not profitable before is now so the hash rate is pushing up very quickly. It is a gold rush like land grad! This is not typical and cannot be sustained long term. It is anybody's guess what the price of BTC will be going forward through next year. With the difficulty you can at least try to project using the most recent difficulty rate increases as I have done above. But still, a big fat guessing game. It is the wild wild west!

If the difficulty rate increases in a 2 week cycle say 20% and BTC stays the same you would be earning 20% less BTC. In this same scenario, if BTC increased 10% and difficulty rate increased 20% you would only take a 10% reduction in BTC payout. So if the previously described difficulty numbers hold true and the rate increases 471.12% over the next 12 months BTC would also have to increase by that amount to maintain payouts that we see today. Hope that makes some sense. Play with this calculator and also go to the stats page and click on difficulty you will get a ton of info here. Hope this has helped!

 https://btc.com/tools/mining-calculator

I already told you the formula, if it doesnt make sense you may want to do some more textbook research on the terms used, until what we told you click;

You can't know what the difficulty will be, but you can expect it will go up.
No it will never, and never(until the BTC mining phase is over anyways but you dont have to worry about that for 100 years or so) will "go back down to go back to X" and normalize or whatever. To go back that much, like you asked, about 33% of the network would have to be taken down. Why in the world would you hope or expect 33% of all machines to be turned off by people profiting from them?

You asking this repeatedly seem to show that you do not understand what I and others have told you so far. Pay attention;

In general the difficulty will keep going up as long as its profitable to do so. More profit, more people get in, everyone get less BTC because everyone share the same pie. Simple, logical, make sense right?

Why does everyone make less? The BTC reward is fixed per block until halving every 4 years ish. More people mining = more people sharing the same reward limit.

So if the network double in hashrate, the reward is effectively halved, because it will take twice as much time to find a block. It's simple mechanics to grasp, easy to build a model on. But the prediction of actual values is hard to grasp and impossible to foresee with accuracy, just assume 10% growth average constant, forever, if you want an idea.

Again. Is it very profitable? Yes = Everybody and their grandma, just like you, want said profit, they jump in on the wagon. Consequence, more people share the same reward = less BTC for everyone.

Regardless, be careful because your approach seem to forget the most important factor; actual value of BTC (fiat/purchase power). It is more important than difficulty. I shouldnt have to explain that one.

Diff changes every 2 weeks for BTC.  You can look it up on the new-fangled thing called the, let me see what was that again, Internet... 

Hey there Fanatic26,

Thanks for your honest feedback, you are right, we should be prepared for the worst case scenario.

Not knowing the formula behind these calculators though makes it more difficult. Do you or does anyone have a clue of what formula does Antpool/Cryptocompare use?

And in the current uncertainty context, would you, as per your experience, consider it a wise choice to make such a bet by paying now for miners that will be delivered in April?

In these circumstances, I think it may be best to just switch to a different cryptocurrency, unless we're forecasting a massive raise of BTC value which may compensate for the insane increased difficulty (we should be forecasting a similar growth trend in the long term).

Cheers

You literally cannot forecast for more than a month in this industry. It is not possible.

That being said the insane ROI times of under 60 days that we have had in the last 2 months are not the norm. At the beginning of the year we were looking at 6 month ROI times on bitcoin miners and still doing this. All the doom and gloom people are just expecting retarded profits to continue on to infinity and thats just not the way it works. This industry ebbs and flows based on a large number of variables. If you cant stomach the ride this is not the industry for you. If you want to evaluate success you are better off looking at what the lowest bitcoin price your business can survive on and go from there. You dont base your calculations on profit, youi base them on survival time.. You also need to make sure you hold enough cash reserves for the times when things arent so hot.

Thanks for your quick feedback!

Actually, I've got data from the 4th of December as well, here's compared to the 17th and the 18th (today):

04/12/2017: 4.41 btc/month
17/12/2017: 3.73 btc/month
18/12/2017: 3.17 btc/month

The trend is going downwards. Do you mean the calculator is wrong, or that there will be a correction and all of a sudden we'll go above 4 btc/month again with these 800TH/s?

The only predictor I have to measure the return on investment of my operation is the Antpool's calculator, which offers the same results as Cryptocompare's: https://www.cryptocompare.com/mining/calculator/

If these are wrong, then how can we evaluate the success of a potential mining enterprise?

Cheers

Indeed, its not relevant, but what i said refer to very low chance of seeing any of the hardware at the expected date, hence vapor, for now. Moving on, difficulty jump;

It happens every 2016 blocks, target 1 block per ten minutes average and is based on effective network hashrate, 15% per day is inaccurate and impossible it would mean the whole world's mining operation tripled in 8 days.

So for explanation sake, if the whole world was using only and exactly 100 000 Antminer S9, and you online 10 000 more immediately after new diff change, and they remained at 110 000 S9's you would have a 10% ish difficulty increase over a bit under 2 weeks. Now scale that up to current massiveness of the whole network and that's how it works, but with many more actors.

So if you want to guesstimate growth, look at the past and forcast future deployments as best as you can.

Hey there,

Thanks for your replies!

- About the hardware, I own a sourcing company with staff on the ground in China and the EU. I've considered the following miners:

• Bitmain Antminer S9, 14Th/s, earliest delivery uncertain;
• Ebang's Ebit miner E9, 9Th/s, earliest delivery on Jan. 2018;
• Canaan AvalonMiner 741, 7.3TH/s, earliest delivery on Jan. 2018;
• Canaan AvalonMiner 821, XXTH/s, earliest delivery on Feb. 2018;
• Halong DragonMint 16T, 16TH/s, earliest delivery on Apr. 2018.

I got different quotations with varying prices & delivery times for each model, from different actors, including:

• The 4 original manufacturers;
• Their official distributors, and;
• Trading companies (random resellers).

I haven't taken the necessary steps in order to formalize any purchase yet, but for the moment, their feedback has been positive and I have no reason to believe any of them isn't real.

I'll be glad to update you once we go ahead with the process, but what machine we use is irrelevant to the question I outlined in my post.

- So, about the network difficulty, I understand it's a gradual thing, but 15% in 24h, does this mean in one week it won't be profitable anymore?

To give you an idea of the situation in USD, yesterday my forecasted monthly profit with 800TH/s was 71.5k$, today it's 60.7k$. And that's considering Bitcoin at 19.15k$ (it has actually gone down 1k$).

If network difficulty keeps going up at this rate or BTC goes slightly down, I won't even be able to recover the investment in months.

Cheers

Beside your mining hardware speculation on currently vaporware your difficulty estimation fairly reflect how it is. Yes diff go up, reward go down, thats how it is.

***  Halongmining Dragonmint miner is a SCAM! If someone buys their miners without any well-known and trusted Forum Users 1st getting one for doing a review and posting it here then well, you have been warned ***
You mean the MYTHICAL next batch of the MYTHICAL Dragonmints.

To-date ZERO verifiable proof of their existence has been presented to us Forum members.
Until there is REAL PROOF of their miner's existence that is presented by RELIABLE and TRUSTED members stay far far away from Halongmining.

That said, yes diff will continue to increase and amount of reward - in BTC - goes down. Thing is, by and large the $ value of each BTC is continually rising even faster. Translation: When all is said and done you still make more (for now at least) despite longer time between cracking blocks.

Hello everyone!

I'm considering setting up a Bitcoin farm in Europe.

I've done an extensive supplier research and I'm considering DragonMint 16Ts for my setting.

I've used this calculator to make my numbers: https://www.antpool.com/support.htm?m=calculator

The problem is that as network difficulty increases, profits decrease radically. Here are 2 tests I ran for 50 of such miners yesterday and today:

Dec. 17, 2017:

• Hash power: 800TH/s
• Network difficulty: 1,590,896,927,258
• Mining pool fee: 1.50%
• Gross profit: 3.73653713125166 BTC

Dec. 18, 2017:

• Hash power: 800TH/s
• Network difficulty: 1,873,105,475,221
• Mining pool fee: 1.50%
• Gross profit: 3.17357750705357 BTC

Perhaps I'm doing something wrong, but considering next available batch of DragonMints will be delivered in April, I probably won't be mining a single monthly Bitcoin by then.

Looking at the formula, it seems to work like this: X * NETDIFF * POOLFEE * HASH = BTC

I understand the difficulty has gone up, but X has gone down (from 1.9572487E-13 to 1.4119055E-13), and I don't know how are they coming up wth that coefficient or if that can change for the better over time.

Could anyone point out what I'm doing wrong, or if that's how things are going be?

Thanks in advance!

Cheers