A dynamic data compression system for forming and transmitting data from a downhole location within a borehole penetrating the earth to a surface location includes a data source that forms raw data sets of a formation contacting the borehole, the raw data sets being formed at a fixed rate and a data rate sampler that determines a transmission rate of a transmission channel. The system also includes a compression engine configured to compress the raw data sets according to compression parameters to form compressed data sets. The compression parameters are dynamically changed based on the transmission rate.