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

The diamond has little to no affect on the displacement delta.  

On one hand the water level would increase slightly when the frozen water that's floating above the waterline gets added.  

On the other hand the mass of the displacement stays the same except for the following.  Ice has a variable density.  Snow for example is almost all air.  Whereas very clear Ice has very little air.  But all normal ice has some air because ice expands as it freezes.  The crystal lattice retains the mass of the air in its structure.  Water therefore has more volume in frozen form than liquid form and thus less displacement.

Depending on the amount of air in the given piece of ice the water level would actually go down as the mass of the trapped air reaches equilibrium with the ambient air pressure.

The water level is going to go down.  Which seems counter intuitive.  The only thing the diamond affects is the ability of the ice to retain the mass and volume of trapped air.