Bitcoin Mining Difficulty is an indicator that reflects how difficult it is currently to compete for block extraction on the network. The fewer machines connected to the network, the lower the complication and vice versa.
Difficulty growth dynamics (as of September 1, 2019, Bitcoin's average difficulty is 10,771,996,663,680.01428571):
Current difficulty and times
Difficulty levels change constantly. Here are several relevant sites and ways to find out what level the parameter is currently at:
- https://www.blockchain.com/en/charts/difficulty. Graph of Bitcoin mining difficulty over the entire existence of the blockchain network (you can select a period).
- https://www.coinwarz.com/difficulty-charts/bitcoin-difficulty-chart. Graph and table with average values per day. Statistics of changes in the value of Bitcoin Difficulty per day; 30, 60 and 90 days are presented.
- http://bitcoin.sipa.be/ – Various charts showing the current and predicted difficulty of the BTC network.
- https://bitcoinwisdom.com/bitcoin/difficulty – information about Bitcoin hashrate and difficulty, comparative charts.
- https://diff.cryptothis.com/ – another detailed and visual website that updates information in real time.
- On the console Bitcoin Wallet Bitcoin Core type the commands getdifficulty or getmininginfo: Note: to know the current value this way, the blockchain network must be fully loaded (100% synchronized).
What is the difficulty of mining Bitcoin?
The amount of computing power on the network can change significantly over time – at the time of Satoshi Nakamoto’s first BTC mining, it was just one computer or laptop. Today cryptocurrency mining Entire industrial grade farms are involved in this activity.
The Bitcoin network uses a global block mining difficulty. Valid blocks must have a hash below a certain limit. In other words, different mining pools set the lower difficulty limit.
The formula by which the indicator is calculated:
difficulty = difficulty_1_target / current_target
- current_target is always a 256-bit number
- difficulty_1_target – in the classical sense, a number in which the initial 32 bits = 0 and the remaining 1. The parameter is also called pool difficulty and may vary slightly depending on the method of measuring difficulty.
The Bitcoin protocol uses a custom number type with limited precision and floating point. For this reason, miners often approach difficulty based on this, there is a notion for this – bdiff.
Why is complication necessary?
The software should involuntarily make it more or less difficult for miners to find the hash – this is necessary to ensure the security of the generation of new blocks. Thanks to the adjustments, the system remains secure: no matter how many devices there are blockchain network, the calculations will still take about 10 minutes.
Difficulty of mining cryptocurrency – a very important indicator that any beginner should take into account. The more miners and new blocks there are in the network, the less profitable the coin becomes. That's why miners Those who were the first to enter the sector were able to make significant profits in a short time. But those who come later must be sure that mining will bring them additional income.
How the difficulty changes
The difficulty of mining on the Bitcoin network can increase indefinitely until the last coin is mined. At the same time, the rate at which the difficulty increases can also increase. Today, the difficulty level in mining coins on the Bitcoin network has increased to such an extent that the production of each new coin takes a very long time and requires very powerful equipment. For many miners, this is a critical factor: not everyone has the opportunity to purchase such expensive equipment or upgrade old equipment.
Or, in theory, the difficulty can decrease if the system notices that blocks are being mined too quickly. In practice, this almost never happens; since 2015, this situation has only occurred five times. There is a regular trend towards increasing difficulty.
What factors influence the complication
Bitcoin Mining Difficulty Indicator three main factors influence:
- The number of people and, consequently, devices involved in the network
- Have a global set difficulty, which depends on finding a lower valid hash of a given level.
- Mining speed set directly by the mining pool.
The last parameter differs for each individual pool and for each cryptocurrencies.
How is difficulty calculated?
The difficulty of mining blocks starts at 1 and cannot fall below this value. The network then compares the formation timestamps of each set to see how long it took to form them.
If we want to know how long it took to create the 2016 blocks, we will assign this parameter to the variable T. We want the 2016 blocks to be created in two weeks, so if T is equal to another value, we multiply the difficulty by (2 weeks / T ). For example, if mining the required number of blocks took only 10 days, then the difficulty is too low and needs to be increased by 40%.
Bitcoin mining difficulty increases or decreases depending on whether it took less or more than fourteen days to generate the 2016 blocks. As a rule, if the network hashrate drops, the indicator also decreases.
You can roughly predict the next change based on the time of the last blocks. However, no one can make long-term predictions, although there are attempts to do so with the help of hardware advances – Moore’s law, exchange rate direction analysis, etc.
How are Bitcoin difficulty, price, and mining profitability related?
Mining profitability depends on many factors, including difficulty and halving (periodic reduction of the reward). A miner who managed to create a new set in the network receives a reward in the form of cryptocurrency. It is believed that 10 minutes is enough for the equipment of network participants to verify all transactions contained in the set.
The reward goes to the miner who found the pool last, so participants join the pools – the group has a much better chance of doing so.
Atualmente, 12,5 Bitcoins são minerados a cada 10 minutos no mundo, e em 2025 esse número diminuirá para 6,25 BTC. Paralelamente a isso, a popularidade da criptomoeda está crescendo o tempo todo e mais e mais pessoas estão recorrendo aos pools de mineração. E as 12,5 moedas recebidas são divididas entre centenas de milhares de pessoas; a renda de cada mineiro individual diminui. Conseqüentemente, os mineiros precisam aumentar incessantemente a potência de seus equipamentos para obter pelo menos um pouco ganhar dinheiro. Mas fazer isso o tempo todo é difícil.
It remains to monitor the difficulty change graphs and take into account that the number of miners connected to the network will always have a positive or negative effect on the profitability of the process.
Now a little about how mining difficulty is related to the growth or decline rate of cryptocurrency.
DataLight analysts in May 2019 saw an absolutely clear relationship between BTC mining difficulty and changes in exchange rates. This year, there were 3 times when a sharp increase in price immediately followed an increase in mining difficulty. If we consider annual changes, then in January alone the price of the coin doubled, and the difficulty increased by a third.
Three main assumptions about where reciprocity comes from:
- The difficulty and hashrate increase along with the price as more miners try to claim the reward.
- Instead, price follows difficulty and hashrate.
- The relationship between the indicators is determined by a power law. If you follow this relationship, you can develop a formula for calculating the BTC rate.
No one knows which theory is correct, but many miners and investors have already decided to pay attention to this clothing to make the right decisions.
Conclusion
Changes in mining difficulty are closely related to the technological factor. Miners are interested in bringing new high-performance equipment to the market, and are also trying to reduce electricity costs as much as possible – finding free sockets or locating the farm in regions with low electricity costs. Does not lose relevance and cloud mining.
As long as someone is involved in mining, the difficulty will increase. This will reduce the profitability of the process, home mining will become an obsolete phenomenon, and those interested will go to exchanges or for the extraction of altcoins. The Bitcoin Mining will be left to large corporations that have sufficient resources and physical space to install hundreds of pieces of equipment.