Bitcoin difficulty is a measure of how difficult it is to find a new block. The higher the difficulty, the more difficult it is to mine one block on the Bitcoin network. The difficulty rate was last adjusted on June 5th, recording a change of 14.71% from the previous level (according to bitcoinwisdom.com). At 4,940,704,885,521, Bitcoin difficulty is at its highest level so far this year. ON January 1st, Bitcoin difficulty stood at 1,931,136,454,487.
The Compensatory Lift
The Bitcoin network varies its difficulty levels to ensure a constant output of one block every 10 minutes. If the network hash rate (a measure of mining speed) is high, the time taken to discover a new block could be less than 10 minutes. So, the network increases the difficulty level proportionately to maintain the block discovery time at 10 minutes. Conversely, if the hash rate slows down, then the same protocol will reduce the difficulty level.
Difficulty is recalculated every 2016 blocks, such that the previous 2016 blocks would have been generated in exactly two weeks – had everyone been mining at this difficulty. Hash rate is calculated as the time taken to mine one block.
What Is Leading to This Rising Difficulty in Bitcoin Mining?
Now, with more and more miners joining in, the rate of block creation (the hash rate) has gone up significantly. The advent and popularity of ASIC miners have further expedited the Bitcoin mining process. Hash rate is up from 13,823,613,194 GH/s (as on January 01, 2018) to 35,366,943,171 GH/s presently.
The rise in Bitcoin mining difficulty is a subsequent effect of the exponential rise in Bitcoin mining speed. Thus, difficulty has been rising to compensate and bring the rate of block creation back down to the desired constant. This is essential to ensure reliability and smooth functioning of the Bitcoin network.
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