jhansen858, its anyone's guess.

An 18% increase was based on current difficulty lagged from the boom market which may prove to be greatly exaggerated.  If prices continue to fall or stabilize at a low price, then the rate of increase in the difficulty levels will definitely reduce.

If prices of bitcoins drop further then miners will leave the market and the rate of difficulty levels will drop as a result, as difficulty levels are automatically adjusted depending on the total mining success in the previous period.

But this takes us back to profitability levels for mining rigs from butterfly labs which would have to be reworked taking into account reduced profitability from reduced earnings due to the lower price of bitcoins.  We may see linear rather than exponential levels in difficulty.

So forecasting difficulty levels is about as difficult as forecasting bitcoin prices!

It will be interesting to do same analysis in a months time based on the then current difficulty level changes.

A lesson here is that anyone considering buying butterfly rig that they should avoid placing an order unless they have first taken into account the fact that the butterfly labs calculator shows a snapshot in time and ignores changes in difficulty level over time.


Here is a graph of historic difficulty (courtesy of bitcoin.sipa.be).





Here is another chart of interest. In the next chart in the top graph the difficulty level is shown in red.

This puts the relationship between price and difficulty in a good perspective showing that difficulty levels do also eventually adapt to the price of bitcoins (shown in blue).