predictions of future difficulty - page 2.

alh

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Quote from: jonnybravo0311 on June 30, 2015, 03:56:13 PM

but there was a sudden increase in difficulty in 2014 and with high difficulty changes around 20% the calculators show that I may never recover my investment

Of course you won't recover your investment if you assume the network is going to have a 20% difficulty increase every adjustment while the exchange rate of BTC remains static. Sure, there were plenty of large upward adjustments in the past as ASIC adoption became widespread and huge industrial mining farms came online. You'll also notice that things have settled down quite a bit. 11/5/2014 was the last time the difficulty adjusted upwards of more than 10%. Since then, we've gone from a difficulty of 39,603,666,252 to our current level of 49,402,014,931. That's 17 adjustments, of which 7 of them were adjustments down.

While I agree that the difficulty is way more "calm", that's only relative to our brutal experience in 2014. The difficulty has still adjusted upwards of 25% in about 6 months. That's about 56% per year assuming it remains this "calm". It's possible we have hit some kind of saturation point, that will essentially limit how rapidly difficulty can grow. If price were to go up significantly, I am certain we'll see bigger difficulty increases.

jonnybravo0311

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Quote from: ?? on ??

but there was a sudden increase in difficulty in 2014 and with high difficulty changes around 20% the calculators show that I may never recover my investment

Of course you won't recover your investment if you assume the network is going to have a 20% difficulty increase every adjustment while the exchange rate of BTC remains static. Sure, there were plenty of large upward adjustments in the past as ASIC adoption became widespread and huge industrial mining farms came online. You'll also notice that things have settled down quite a bit. 11/5/2014 was the last time the difficulty adjusted upwards of more than 10%. Since then, we've gone from a difficulty of 39,603,666,252 to our current level of 49,402,014,931. That's 17 adjustments, of which 7 of them were adjustments down.

alh

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I have to ask: What motivated you to purchase your mining hardware and begin mining Bitcoins?

Various folks all have a different set of motivations for mining, though a common one is "to make money". While it sounds like it should be easy based on the common thinking of Bitcoin, that proves to be a fairly elusive goal. You have picked up on difficulty as being a key "ingredient", which it is. There is also the price of Bitcoin (i.e. what you can exchange it for in terms of money where you live). What's interesting is that difficulty seems to follow price. By that I mean if the price of Bitcoin were to double, you can count on difficulty to increase over time. What we have seen for a big chunk of 2015 is that as price has fallen, difficulty has more or less "stabilized", though not really fallen since the end of 2014. In case it wasn't obvious, 2014 was a brutal year for mining, as it seemed like every 12-13 days, the difficulty would jump 5-10%, sometimes 20%. That was relentless, and almost caertainly due to the "ASIC Arms Race" for more hash rate at any cost. It's clear that thinking can't last forever.

Finksy

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And?

TheRealSteve

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Quote from: jonnybravo0311 on June 30, 2015, 12:10:24 PM

Calculation of difficulty is far easier than this. [...]
Here's the formula (simplified version, but it's close enough):

Code:

Difficulty * 2^32 / hash rate = time in seconds to solve a block

Since you know the perceived hash rate and the time it took to solve the block, you can calculate the difficulty.

Just to clarify - that's a (slightly simplified) formula for converting between a known difficulty and hash rate.

Quote from: jonnybravo0311 on June 30, 2015, 12:10:24 PM

The difficulty changes based upon the block solve rate. Bitcoin wants to add a new block to the chain every 10 minutes. Every 2016 blocks it performs a sanity check and adjusts the network difficulty. The network says, "the previous 2016 blocks should have taken 2 weeks. How long did they actually take?" If the answer is, "it took longer than 2 weeks", the difficulty is adjusted downwards. If it took less than 2 weeks, the difficulty is adjusted upwards.

And that code is here: https://github.com/bitcoin/bitcoin/blob/master/src/pow.cpp#L53 (CalculateNextWorkRequired)

While this...

Quote from: professor21 on June 30, 2015, 12:04:20 PM

there's a modified taylor series calculation for the logarithm.

Code:

lots of code off the wiki

Is the code to get from the compact 'bits' form to a difficulty value. It's not used to determine the next difficulty.

Quote from: professor21 on June 30, 2015, 12:04:20 PM

I'm kind of wondering bitcoin isn't tied to any country with technology, economy, image, GDP, does it have real value so that the price can go up long term?

And that's a completely separate question along the lines of "What makes Bitcoin have value?".. a question you probably should have googled before

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Quote from: professor21 on June 30, 2015, 10:53:52 AM

is there a way to predict the future difficulty of mining or is it set by someone? and everyone thinks the price will go down in the future? so with 0 electricity I am still not going to make a profit with buying 2 s3s and power supplies at $300?

you are a very interesting poster. you display real knowledge in math and you ask simple questions. if you buy 2 s-3's and a psu for 300 usd today with no power cost you should turn a profit.

As you can see I have done extensive series of diff threads dating back to Last summer. yet it is all past preformance
info. With your math skills I am pretty sure you know past performance is no guarantee of future performance.

jonnybravo0311

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I replied to this very query via the PM you sent me. I've included that reply here as well:

Calculation of difficulty is far easier than this. The difficulty changes based upon the block solve rate. Bitcoin wants to add a new block to the chain every 10 minutes. Every 2016 blocks it performs a sanity check and adjusts the network difficulty. The network says, "the previous 2016 blocks should have taken 2 weeks. How long did they actually take?" If the answer is, "it took longer than 2 weeks", the difficulty is adjusted downwards. If it took less than 2 weeks, the difficulty is adjusted upwards.

Here's the formula (simplified version, but it's close enough):

Code:

Difficulty * 2^32 / hash rate = time in seconds to solve a block

Since you know the perceived hash rate and the time it took to solve the block, you can calculate the difficulty. See, the network itself has no concept of actual hash rate... surprise!... it only knows the difficulty and the time it took to solve a block. It calculates the hash rate based on this. This is why you see such variant spikes in charts like those found on bitcoinwisdom.com.

professor21

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there's a modified taylor series calculation for the logarithm. I'm kind of wondering bitcoin isn't tied to any country with technology, economy, image, GDP, does it have real value so that the price can go up long term?

#include
#include

inline float fast_log(float val)
{
int * const exp_ptr = reinterpret_cast (&val);
int x = *exp_ptr;
const int log_2 = ((x >> 23) & 255) - 128;
x &= ~(255 << 23);
x += 127 << 23;
*exp_ptr = x;

val = ((-1.0f/3) * val + 2) * val - 2.0f/3;
return ((val + log_2) * 0.69314718f);
}

float difficulty(unsigned int bits)
{
static double max_body = fast_log(0x00ffff), scaland = fast_log(256);
return exp(max_body - fast_log(bits & 0x00ffffff) + scaland * (0x1d - ((bits & 0xff000000) >> 24)));
}

int main()
{
std::cout << difficulty(0x1b0404cb) << std::endl;
return 0;
}

alh

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Difficulty adjustments happen every 2016 blocks. Depending on how long it took for the network to "mine" those 2016 blocks, determines the magnitude, and the sign (positive or negative) of the adjustment. If it takes less than 14 days, the difficulty adjustment is positive. If the elapsed time is say 12.5 days, then the increase will be larger than if the elapsed time is say 13.8 days. If it takes longer than 14 days, then the difficulty will be lowered (i.e. a negative adjustment).

The whole point of the difficulty adjustment is to try and maintain a steady pace of blocks, and the associated Bitcoin reward within. As I view it it, it's intended to "regulate" the rate at which new coins are added to the "money supply".

TheRealSteve

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Quote from: professor21 on June 30, 2015, 10:53:52 AM

is there a way to predict the future difficulty of mining

No. As blocks are mined within a difficulty period, the closer you are to the difficulty adjustment, the better you can make a bet - https://bitcointalksearch.org/topic/june-28th-to-july-12th-difficulty-thread-picks-are-closed-1102528 - you can even try to look at historic network hash rate and/or difficulty and make a guess as to how likely it is that it's going to go up by N% or down by M% - http://organofcorti.blogspot.com/2015/06/june-28th-2015-network-statistics_29.html - but you can't really predict it particularly well enough to make exact decision on.

Quote from: professor21 on June 30, 2015, 10:53:52 AM

or is it set by someone?

It's algorithmic.

Quote from: professor21 on June 30, 2015, 10:53:52 AM

and everyone thinks the price will go down in the future?

'Everyone'? No. Some say it will go down, some say it will go up, some are going to ask 'how far into the future?', etc. Nobody has a working crystal ball.

Quote from: professor21 on June 30, 2015, 10:53:52 AM

so with 0 electricity I am still not going to make a profit with buying 2 s3s and power supplies at $300?

Plug it into an online calculator, change some variables around (mostly difficulty), see what happens.

Make sure you compare any results against just straight-out buying BTC, and try to put some figure on resale value of the miners and/or PSUs for a more complete picture.

professor21

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is there a way to predict the future difficulty of mining or is it set by someone? and everyone thinks the price will go down in the future? so with 0 electricity I am still not going to make a profit with buying 2 s3s and power supplies at $300?

Topic: predictions of future difficulty - page 2. (Read 2021 times)