Weekly network forecast 8th April 2013

Important: 
These posts are a test of the methods used to create the forecasts, and definitely do not forecast non-MTGOX US$ / BTC price related changes - for example the current massive decrease in the cost of a hash. Please do not use the forecasts here for financial forecasts - the "ASIC choices" posts are more useful in that respect.


Errata: Nil.


0.Introduction
This week the network weekly average hashrate increased to ~59 Ghps, an increase of 7 Thps. Even so the one week forecast from last week and the two week forecast from the week before significantly overestimated the network hashrate. Interestingly, the three and four week forecast from three and four weeks ago were quite accurate.

With this in mind, I was interested to see how the errors stacked up so far since MTGOX started trading:

One week forecast: mean error: -1.6%, mean absolute error 5.9%,  error standard deviation 7.4%
Two week forecast: mean error -2.6%, mean absolute error 8.9%, standard deviation 11%

Three week forecast: mean error -2.4%, mean absolute error 10%, standard deviation 14%

Four week forecast: mean error -2.5%, mean absolute error 13%, standard deviation 17%

I'm quite happy with these errors so far - not too different from the original estimations at the start.

Last week I thought the forecast difficulties would be too low. It turns out they were more accurate than I'd thought, and my guesstimate of the next difficulty was wrong.

So, are we looking forward to a 21 Thps jump in weekly average hashrate next week? I think not. The network hashrate is simply not keeping up with the recent massive increases in price. Once ASICs are more widely available, the hashrate will probably keep better pace with the price.

1. Models and datasets:

The model datasets have been collected into one paste to save time. Model estimates have been likewise aggregated.

Forecast and canary model analysis

All datasets

All estimates

Canary model: An estimate of the current hashrate estimate based only on current price and previous network hashrates. Used to detect changes to the network caused by agents other than the direct action the MTGOX US$ / BTC price as determined by the model.

Models f1, f2, f3 and f4: These are the one, two, three and four week forecasts of the network hashrate, based on the modelled relationship between the MTGOX US$ / BTC and the network hashrate.

2. Results

• Canary model, Models f1, f2, f3 and f4: Network hashrate is within the confidence interval the three and four week estimates. The one and two week models significantly overpredicted the weekly average hashrate. The Canary model, f3 and f4  were significantly accurate.

• Difficulty modelling: Method one calculates a difficulty estimation using the network hashrate estimation and is recalculated each week. Method 2 calculates difficulty estimation based only on previous difficulties and the MTGOX price, and is only recalculated after each difficulty retarget.

3. Charts

Chart 1: 

A graphical history of the one, two, three and four week forecasts of the weekly average network hashrate compared to the actual network weekly average hashrate.

Chart 2: 

A graphical history of the Canary model estimates of the weekly average network hashrate compared to the actual network weekly average hashrate.

Chart 3: 

A graphical history of the last twenty six weeks of retarget date and difficulty estimates, actual retarget dates and actual difficulties. It should be noted that each retarget will often be forecast by two consecutive weekly forecasts, hence the multiple points per retarget on the new chart.

Chart 4: 

A graphical history of the one, two, and three retarget forecasts of the Difficulty, modelled directly as a function of previous Difficulties and MTGOX US$ / BTC prices.

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