5 ms·

> as the hash rate rate drops, your individual profitability will rise This is not quite accurate. As the hash rate drops, the next difficulty adjustment will

by tromp 4y ago

> as the hash rate rate drops, your individual profitability will rise This is not quite accurate. As the hash rate drops, the next difficulty adjustment will lower the difficulty, and that is what improves profitability. At a given difficulty, it doesn't matter how many other miners join, that just makes blocks arrive faster; it doesn't change the frequency at which a given miner hits the difficulty target, which is what determines their profitability. The last adjustment was around Dec 19 [1], and the next one is normally 2 weeks after, but with 3/5 of the former hashrate, blocks will arrive 5/3 slower, so it will take longer to adjust to a lower difficulty, in early to mid January. [1] https://bitinfocharts.com/comparison/bitcoin-difficulty.html#3mo https://bitinfocharts.com/comparison/bitcoin-difficulty.html...

lucb1e 4y ago
Sorry, your reply coincided with my editing that out. I saw another comment in in this subthread https://news.ycombinator.com/item?id=34140409 https://news.ycombinator.com/item?id=34140409 that indeed pointed that out already and then edited my post just before you replied.
lazide 4y ago
Eh, not quite. There is an important distinction here in how it actually works. The Bitcoin chain difficulty is essentially the number of random lottery tickets ‘issued’ for a given block (size of hash space hashes will be generated in). The first miner to get a winning lottery ticket wins the block rewards. (Each hash being a ‘ticket’). The space is typically insanely large, think 10’s of trillions. Sometimes that happens really fast, sometimes it takes a long time. The difficulty (number of tickets) adjusts at periodic intervals to keep the average winning frequency at around 5 minutes based on the current quantity of hashing, but the actual win rate varies a lot. So cutting actual hash power in half (by taking half of miners off line) gives any single miner remaining twice the odds of getting a block reward. But it will likely take twice as long hashing, and the blocks will mine about half the speed of usual (think 10 mins avg instead of 5), unless the difficulty resets.
- trifurcate 4y ago
  Not quite squared. The hashrate of the rest of the network does not directly matter to you. Only the difficulty matters. Without a difficulty readjustment, cutting actual hash power in half does not double your odds. Think of it like this: if the difficulty is such that there is 1 winning hash out of 1 million possible hashes (oversimplified), and if your hardware calculates 1,000 hashes per second, then your odds of finding a winning hash in 1 second is 1/1,000. Notice how this odds calculation does not take as an input what the other miners are doing. Of course, after a difficulty readjustment, your odds will actually change; that is the entire purpose of the difficulty target. (This comment ignores block header propagation etc. affecting mining latency, which will change mining overhead slightly if block times double)
  - lazide 4y ago
    Not sure where you got squared from? If half the hash rate disappears, your odds do indeed double, as every hash anyone does has the same odds of success, and with has of your competition gone, you now have twice the odds of being the one that gets it. It’s a (approximate to many decimal places) linear relationship. If you had 1% odds, you’d now have 2% odds in the ‘half the hash power disappears’ situation.
    - Anon1096 4y ago
      I don't have expertise in this, but wouldn't it be that your chance of mining a specific block doubles? I don't believe it would affect your overall profitability, because in the inverse case of the amount of miners doubling, if you lose out on a specific block, you can just start mining the next one instead, so on average it should be the same. And you don't lose out on work because of the high randomness of winning hashes.
      - lazide 4y ago
        With only one winning block (generally), yes your chance of mining the specific winning block doubles. There is no explicit co-ordination regarding blocks mined, and no hashes tried by other miners have any impact on you or your odds, except if they win, as there is no (known) co-ordination between (independent) miners on what has or has not been tried yet - any block which produces a valid next-in-chain value is the 'right' one, and every miner who gets a value which isn't the right one, got a wrong one.

by tromp 4y ago

lucb1e 4y ago

Sorry, your reply coincided with my editing that out. I saw another comment in in this subthread https://news.ycombinator.com/item?id=34140409 https://news.ycombinator.com/item?id=34140409 that indeed pointed that out already and then edited my post just before you replied.

lazide 4y ago

Eh, not quite. There is an important distinction here in how it actually works. The Bitcoin chain difficulty is essentially the number of random lottery tickets ‘issued’ for a given block (size of hash space hashes will be generated in). The first miner to get a winning lottery ticket wins the block rewards. (Each hash being a ‘ticket’). The space is typically insanely large, think 10’s of trillions. Sometimes that happens really fast, sometimes it takes a long time. The difficulty (number of tickets) adjusts at periodic intervals to keep the average winning frequency at around 5 minutes based on the current quantity of hashing, but the actual win rate varies a lot. So cutting actual hash power in half (by taking half of miners off line) gives any single miner remaining twice the odds of getting a block reward. But it will likely take twice as long hashing, and the blocks will mine about half the speed of usual (think 10 mins avg instead of 5), unless the difficulty resets.

trifurcate 4y ago
Not quite squared. The hashrate of the rest of the network does not directly matter to you. Only the difficulty matters. Without a difficulty readjustment, cutting actual hash power in half does not double your odds. Think of it like this: if the difficulty is such that there is 1 winning hash out of 1 million possible hashes (oversimplified), and if your hardware calculates 1,000 hashes per second, then your odds of finding a winning hash in 1 second is 1/1,000. Notice how this odds calculation does not take as an input what the other miners are doing. Of course, after a difficulty readjustment, your odds will actually change; that is the entire purpose of the difficulty target. (This comment ignores block header propagation etc. affecting mining latency, which will change mining overhead slightly if block times double)
- lazide 4y ago
  Not sure where you got squared from? If half the hash rate disappears, your odds do indeed double, as every hash anyone does has the same odds of success, and with has of your competition gone, you now have twice the odds of being the one that gets it. It’s a (approximate to many decimal places) linear relationship. If you had 1% odds, you’d now have 2% odds in the ‘half the hash power disappears’ situation.
  - Anon1096 4y ago
    I don't have expertise in this, but wouldn't it be that your chance of mining a specific block doubles? I don't believe it would affect your overall profitability, because in the inverse case of the amount of miners doubling, if you lose out on a specific block, you can just start mining the next one instead, so on average it should be the same. And you don't lose out on work because of the high randomness of winning hashes.
    - lazide 4y ago
      With only one winning block (generally), yes your chance of mining the specific winning block doubles. There is no explicit co-ordination regarding blocks mined, and no hashes tried by other miners have any impact on you or your odds, except if they win, as there is no (known) co-ordination between (independent) miners on what has or has not been tried yet - any block which produces a valid next-in-chain value is the 'right' one, and every miner who gets a value which isn't the right one, got a wrong one.