Bitcoin Mining Difficulty is a Myth!!!

in #bitcoin7 years ago

A HUGE MYTH BEHIND BITCOIN MINING AND DIFFICULTY

Well, I always heard the naysayers and the mining haters saying that Bitcoin mining (and other cryptocurrencies) is not worth it anymore… that you must be careful about the increasing difficulty…

STOP BEING AFRAID OF THE INCREASING DIFFICULTY!!! THE DIFFICULTY AND PRICE CHANGE ARE CORRELATED! Totally!!!

mining.jpg
Real gold rush were miners are hard AF, strong, bold, harsh and cold! THEY COULD HANDLE THE DIFFICULTY!! I guess you need the same soft skills to mine nowadays!

I know they are not 100% correlated but if in the last years you got apart from mining because you were afraid of the mining difficulty, you lost a huge investment opportunity.

I also heard that Cloud Mining companies are scams with the argument that the mining contracts that you buy will not be profitable if the mining difficulty increases and that Could Mining companies hide that from you.

I heard a lot, I got confused, I delayed (unfortunately) the mining investment and I decided to pay to see.
I invested in Cloud Mining and made the research and calcs by my own (like you also should do) but I’m going to present you my conclusions here.

So… i decided to take a close look at the relation of mining difficulty with the profitability of mining. How the difficulty impacts on your revenue, your ROI and if the mining difficulty may ruin or not your profits.

I grabbed the historical prices and difficulty from Blockchain website for the last 3 years and made some charts that came with some surprising conclusions for me.

pricediff.jpg

As you can see here, the Bitcoin price and Difficulty are pretty much correlated at least for the last 3 years. I guess this means that those who were not afraid of the difficulty won some nice bucks!!!

Meanwhile, I decided to come out with a new indicator (at least new for me): the relation of the difficulty with the price.
I called it “Difficulty Strength” and is something like this:

Difficulty Strength = Difficulty / Price

The difficulty strength shows the Strength, i.e. how heavy or strong is the difficulty in relation with the Bitcoin price. As you can see, strength rarely goes is more than 0,4.

diffstregth.jpg

This chart give some hints when is more profitable to mine. When the strength is lower, it should be more profitable. Interesting right?

Another interesting chart I made: relate the price variation with the difficulty variation.

carpricediff.jpg

See how both variations are correlated but that many times the price variation is greater than the difficulty variation?! Cool right?

Now the last graph. It shows the accumulated variation of both Bitcoin price and Difficulty variation. The red is the price and blue difficulty.

pricediffacomu.jpg

As you can see, for most of the time, the accumulated variation of the price is greater than the accumulated variation of the difficulty.
This also helps to conclude that the price variation surpass almost always the difficulty variation

To say that it is not worth to mine because of the difficulty is like saying that you should not start your business because there are competition. Yes, competitions make it more difficult but also works as a market maker!

Now, after this I really that those guys writing the “Scam alert : Do NOT INVEST in Genesis Mining” threat, instead of complaining bla bla bla bla, if they invested on it in 2015 they should have some nice BTC in their pockets right?
I guess it goes like this: talk less and do more. The ones who get rich, don’t get rich talking but making things done (unless you are a motivational speaker)!


Take also a look at this interesting AF articles:
STOP Investment Diversification!
My Investment Strategy - I Don’t Care, I Love It
Compound Interest is What May Get You Rich


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I always wanted to mine but electricity costs are too high here

Where are you living? I'm between Portugal and Italy where electricity is around €0.15/kWh... that's one more reason I choose the Cloud Mining. ;)

0.1 BTC free for mining-you can buy 9 th/s lifetime , offer limited time https://seebit.io/?r=56086

that's so much true! Thanks for great analysis :)

Thanks @awareentity, you are always welcome!

0.1 BTC free for mining-you can buy 9 th/s lifetime , offer limited time https://seebit.io/?r=56086

Great post and research. Thank you.

PS. Cloud mining works great for me. :)

Where are you cloud mining now?

Genesis Mining of course. :) And you?

For now only Hashflare. i was about to invest on Genesis but hen heard about those recent issues... what do you think about that?

0.1 BTC free for mining-you can buy 9 th/s lifetime , offer limited time https://seebit.io/?r=56086

Wow! Great Analysis @bitatlas.
You actually gave me hope here. Thank you.

Thanks! There is no point of worrying about the increasing difficulty!!!

0.1 BTC free for mining-you can buy 9 th/s lifetime , offer limited time https://seebit.io/?r=56086

Nice post, I agree cloud mining is good. With Bitcoin mining that things stopping me from buying ASIC rigs was Availability, Electricity cost, noise and Down time due to failures and repairs. With cloud mining the Maintenance fee is worth the free time I get with my children.

I agree. In what companies are you cloud mining now? What kind of investment are you doing there?

Genesis 17.225 TH/s sofar, working my way up to 100 TH/s.

Keeeeeep going! 17.225 TH/s gives something like $400 a month right? Around 0,14BTC?

I'm hoping its close to that, need a few more payments to check.

0.1 BTC free for mining-you can buy 9 th/s lifetime , offer limited time https://seebit.io/?r=56086

hmmmm... curious. Thanks for sharing. Mining for bitcoin and gold both seem time consuming. But, you may be right, perhaps it is relative. :) If you want a laugh, check out my vlog :) https://steemit.com/@jacquelyne

Sweet! I'm watching it now :)

0.1 BTC free for mining-you can buy 9 th/s lifetime , offer limited time https://seebit.io/?r=56086

Hey @bitatlas. I did a whole bunch of sums a couple of weeks back. I was looking at cloud mining or buying a $2000 mining gpu box.
I converted my electricity charge in KW/hour to Jules to Gigahashes.
My conclusion is that cloud mining is a very poor and slow investment route. Home Bitcoin mining is STILL very profitable for everyone.
Great graphs. Thanks for sharing.

0.1 BTC free for mining-you can buy 9 th/s lifetime , offer limited time https://seebit.io/?r=56086

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0.1 BTC free for mining-you can buy 9 th/s lifetime , offer limited time https://seebit.io/?r=56086

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0.1 BTC free for mining-you can buy 9 th/s lifetime , offer limited time https://seebit.io/?r=56086

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