Can You Solve this Ice Diamond Riddle? ft. Vsauce’s Michael Stevens

The water level is lower when the diamond is submerged than when it is floating encapsulated by ice. Firstly, water will always displace its weight in water in the solid or liquid state, because it is water (and the solid state is less dense than the liquid state). For this reason, the ice cube itself can be neglected and seen as equivalent to a floatation device for the diamond.

When the diamond is in the ice, it is displacing the equivalent of its weight in water, which is 3.5 times its volume in water since its density is 3.5 times that of water. When it is submerged, it is only displacing its volume in water, which is 3.5 times smaller than the amount it was previously displacing. If less water is displaced, then the water level will be lower. If you do the math, you will that when the ice melts and the diamond submerges the water level will decrease by 2.5 times the volume of the diamond divided by the exposed surface area of the water. This is because the volume of water displaced by the diamond will decrease from 3.5 times its volume to 1 volume, a net change of -2.5 V.