Sorry guys, noob question.
I'm new to all this but have been researching it for a few days now and am considering attempting to mine some bitcoin.
What I'm unsure about is whether the difficulty level of bitcoin scales 1:1 with profitability?
For example the current difficulty is 13,000,000 or whatever, and at current profitability I could make say $10 per day profit off "bitcoin miners X" at current difficulty.
So, does that mean that when difficulty doubles, reaching 26,000,000, that my profitability would halve to $5 per day (assuming all other prices remain the same of course).
Is this correct? Some sources I've read seem to suggest that it's not a 1:1 relationship and that if difficulty doubles then profitability does not half but rather decreases by 25% or so.
Thanks in advance =)
Yes..as noted above...it would half, but profit would not lower by the same amount because fixed costs like electricity would stay the same....so profit would actually decrease more since your expenses would take up a larger percentage of your revenue...
What they are probably referring to is difficulty percentage jumps are not equal to revenue loss...meaning that if difficulty jumps 25%, revenues do not decrease by 25%, they decrease by 20%....example, difficulty of 10m goes to 12.5m....10m/12.5m is 80% of the previous revenue, or 20% loss of revenue...