Quote from: Jriker1 on September 02, 2013, 10:31:10 PM

So what's going on with the overall alt coin ecosystem? I fully believe h2o is above board so this has nothing to do with him. I keep adding more hash power and initially I see a nice boost in return. Then after time the value I used to bring in at 1 MH/s before is the same as I'm bringing in now at over 2 MH/s. Maybe even less. Is this:

all alt coins are increasing difficulty so less returns?
bitcoin value increase somehow effecting it?
more people in middlecoin and the block finding increase doesn't match the increase in the number of people funds are being distributed to?

Something else.

Thoughts?

JR

There are several factors at play here.

1) As stated by others, rising BTC prices can have a dampening effect on the ALT/BTC exchange rate of the alt currencies, which may or may not balance out in fiat (generally not, I would think).

2) Another significant factor is that the size of this pool is undermining some of its success. This is due to 2 factors listed below:

2A) If you look at the moment by moment transactions in the pool, you will see that the pool's logic does not have the appearance of only mining while there are profitable open bids for a coin. Rather, it mines a bit longer and the pool's trading logic attempts to sell the coins across a longer period of time so as not to dramatically affect the price received. As hash rates increase, the overmining (if you can call it that, more like mining in excess of the high open bids) increases, and the pool tends hold more coins that take longer and longer to dispose of. During this time, the coins are frequently dropping in value (due to point 1 above - the rise in BTC) and so eventually must be sold at a less profitable position that originally intended. This is the inherent risk of mining in excess of open high (profitable) bids (which for a pool of this size, can be a very short time). If you watch your value closely (adding together all columns of your mining proceeds) you will see this frequent repricing of mined coins taking place (some due to this dropping price and some due to simple overstated pricing). Some of this is unavoidable, but it happens a lot at middlecoin. Not a terrible decision on the h20's part, but it will have this very side effect, which can get more pronounced as the pool size increases. The pool, in essence, bets on the future price of the coins it mines by holding out for a better price (waiting for bids to show up). Profitabililty would be higher if this were not done (in my opinion), but it would take a bit of programming. The current "hold out for a better price" strategy might be a little more successful in a declining BTC market, but is still unadvisable from my point of view, as no coins should be mined that are not convertible for a profit immediately given existing buy orders. The pool should lock in certain profits and move on. Also, some of this "overmining" is inevitable as it takes time for the coins to mature and prices can change.

2B) Another factor is that the very nature of the pool and its size keeps alt coins from getting very far out of whack (from a mining/profitability standpoint). Any that get too profitable quickly get beat back to the common denominator (~LTC profitability) as the pool mines them, and then the pool moves on to the next. In the earlier days of the pool, these anomalies took longer to correct due to the lower hash of the pool which led to greater anomalies and higher profits; now not so much. The newer/cheaper coins are quickly repriced and the opportunities for a large pool like middlecoin are diminished.

Middlecoin is still a great pool, and no doubt there are additional factors, but off the top of my head the above listed factors play a significant role.