Mining Difficulty 

 July 19, 2021

By  Brian Forester

Whether you are new to Bitcoin mining or you are already an experienced miner, you should know that the most important aspect of crypto trading is the difficulty of extraction. If you do not know about this parameter, you will need to read this article to be aware of how the system of Bitcoin mining works. You will also find answers to all your questions, such as “Why is the complexity of cryptocurrency mining constantly increasing?” below.

Table of contents

  • What is Mining Difficulty?;
  • Essential Information About Mining Difficulty;
  • Advantages of Mining Difficulty;
  • Latest Update on Mining Difficulty;
  • Q&A.

What is Mining Difficulty?

The difficulty of Bitcoin mining is a notion that refers to the indicator of how complex it is to find a new hash below a specified level. Mining difficulty is for trading Bitcoin and other cryptocurrencies. Bitcoin difficulty can be found on every blockchain network where the mining is performed with the help of evidence of performance algorithms. Computing power is becoming stronger and stronger, allowing us to earn more money on the Bitcoin network. To be a successful miner, a person needs to use the most modern equipment. The main thing is that using brand-new technical opportunities and an increase of mining difficulty should be in balance. High difficulty means that more computing power is essential for a particular cryptocurrency that is mined.

Essential Information About Mining Difficulty

If you do not want to lose your money, you will have to make yourself familiar with network difficulty.

Many cryptocurrency networks, including Bitcoin, work on the basis of proof-of-work blockchains where transactions should be verified by miners.

Here is the process in a nutshell:

  • Transactions are combined into the blocks and then put on the waiting list to be added to the blockchain and, thus, be verified or, as it is also called, be mined.
  • The amount of blocks mined in a single moment is limited, so it usually takes an hour to get around six confirmations. On networks like these, miners try to find the right number in the algorithm to add a new block with transactions to the blockchain. To access the process of mining, traders should, of course, have cryptocurrency software on their computers that require great computing power. Cryptocurrency difficulty refers to the extent of the power needed for a particular digital currency.
  • It is important to understand that block difficulty depends on hash power that refers to the average computational power used in the mining process when a miner tries to get access to a block and add it to the chain.
  • Another essential notion in the crypto trading world is a hash algorithm. Miners use hashes – special codes to take transactional data and then represent it in another way. Hashes generate the same output, but it cannot be then reversed, and the original data will never be shown. This process is needed to generate hash codes randomly. Blocks cannot be put on the blockchain unless a miner produces a code that is lower or equal to a target hash.
  • During the hashing process, miners change a single value – a nonce. When changing a nonce, a hash changes, too. The set of numbers used in creating a brand-new hash is impossible to predict. To get a number that is lower or equal to a target hash, miners should repeat the same action of adding a nonce to the data. Once they get a suitable hash, they will be able to add a block of the transaction to the blockchain.
  • The target value correlates with Bitcoin block difficulty. If the target value is low, then a miner has to do a lot of repetitions before getting a suitable number which means that the block difficulty is high. Thus, when a difficulty is high, a miner has to put a bigger number of various nonces until he gets the right hash.

It is very rare that a miner will get a needed number from the first try or even for the first few ones. Miners use great power to complete these processes quickly. The hashing process can be compared to the lottery, where the winning number is unpredictable, so it takes a great effort and a huge number of tries to get a needed one.

Advantages of Mining Difficulty

Sometimes traders want to establish Bitcoin mining difficulty of a higher level. It is not obvious why miners are willing to do so. Moreover, this action may lead to the reputation of the same function. However, there are some important pros of increasing mining difficulty. Let’s have a look at two of them.

The first advantage of high mining difficulty on any Bitcoin network is that the higher difficulty adjustment is, the more difficult it is for fraudsters to hack the network. If high hashing power is needed then, special computers should be used. The probability that many people have professional equipment like these is rather low. Fraudsters need to overcome the computational power. Otherwise, it is not possible to gain a 51% majority control over the network and its data, for this goal, a computer that can generate trillions of solutions every second. Therefore, miners can feel that their cryptocurrency is safe when the difficulty of the network is high. It is also harder for malefactors to access miners’ personal data in this case.

Another advantage is connected to Satoshi Nakamoto’s thesis (which can be found in the Bitcoin whitepaper) about the importance of a stable production rate of each new block in a particular time period. Mining difficulty deals with the problem of fluctuating number of blocks added to the blockchain every hour. The Bitcoin network was designed so that one block is added to the blockchain per 10 minutes, but the timing depends on a particular cryptocurrency. For example, on the litecoin network, a new block is added every 2,5 minutes. The problem that occurs is that the average amount of hashing power for all miners can vary.

When networks were not as developed as they are today, there was only one simple desktop computer controlling the difficulty adjustment. Nowadays, when there are more miners on the network, we should expect the process to be much more complicated. Special machines – ASICs were created to plow through the hash functions faster than ever before. Even under these circumstances, it is essential to control the number and frequency of generated Bitcoins. The software is capable of making the target hash rate lower or higher depending on the current situation. This also affects difficulty adjustment too.

Latest Update on Mining Difficulty

Because changing the hash rate is a self-correcting process, every miner should track the current rate even if they cannot influence it. For example, within the last two weeks, mining difficulty fell drastically. The current difficulty is 12,6%. Until this date, it is the lowest rate not only of this year and the most precipitous fall of the numbers ever since 2012.

The starting figure of mining difficulty was 1. The bigger the number becomes, the higher cryptocurrency difficulty is. Now it equals 20.608 trillion, but, as it was calculated, some weeks ago, the number was even bigger (and by the way, it was the biggest amount in the whole history of cryptocurrency networks) – roughly 23,5 trillion. This drop was essential to correct the loss of hash rate that the Bitcoin network experienced recently. Usually, it takes some time for mining difficulty to adjust and return to the normal figures. It depends on how fast miners will be back trading, and the hash rate will be normal again. For now, the difficulty rate is still low because not enough miners began trading again, so it is still not possible for the network’s difficulty to be at the levels it was more than two weeks before the drop.

Why you need to know the current mining difficulty rate? It is important since it can help you predict when it is a good time for trading actively. Now, when the situation is like that, it is a perfect time to mine.


What is the maximum difficulty?

You can calculate the maximum difficulty like this: you should divide the maximum given target by 1. As a result, you will get a huge, huge number (roughly 2^224). Actually, we should calculate the real maximum difficulty by dividing by 0. However, we will get no result this way. The main thing to remember about the difficulty rate is that it is almost not limited since the maximum number is huge. Because the hash number tends always to fluctuate, the Bitcoin difficulty will be growing. You can always search for the current difficulty. The current number is already estimated for you. It is also easy to find records about previous indicators. Luckily, access to this data is free.

What determines Bitcoin mining difficulty?

There are a few factors affecting cryptocurrency difficulty. We will make you familiar with four main factors. The first one is how many miners are out there trading and making transactions in a particular cryptocurrency. Another factor is connected to the previous one since a lot depends on the cryptocurrency itself and its network. For instance, the mining difficulty rate depends on the frequency of adding a new block into the blockchain. It can vary: for Bitcoin, the average time for one block is 10 minutes, while for litecoin, it is only 2,5 minutes needed to add new blocks. The third thing that affects mining difficulty is the global hash rate that should be below a particular level. Finally, the extraction complexity also affects mining difficulty. It is established by the mining pools.

What is Bitcoin block difficulty?

Bitcoin block difficulty is a rate of how complicated it is to add a block into the blockchain. This measure can be different for each cryptocurrency. When traders talk about high Bitcoin block difficulty, they mean that major computing power is needed for the mining process. The target goal of all miners is to add a block to the blockchain. In general, this measure is only rising because new technologies are implied every year, so it becomes possible to solve the problem, create and verify new blocks. Even if you have never heard about cryptocurrency difficulty, you cannot earn new coins without your mined cryptocurrency being affected by this defined rate. Cryptocurrency difficulty is used to fix the time periods of adding blocks to the blockchain even though the hash rate is constantly changing. You can read about what affects the difficulty in the details above.

Brian Forester

Brian is an experienced journalist and crypto enthusiast. Founder of CryptoCurry - famed for his insightful input on the future of cryptocurrencies and blockchain technologies.

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