Mining difficulty is a key indicator in the Bitcoin network that reflects how hard it is to mine a new block. This parameter impacts the security and stability of the network.
What is mining difficulty in simple words
Mining difficulty is a number that shows how many times, on average, miners need to calculate a hash function to find a single block in the Bitcoin blockchain. This value sets the condition for successfully finding a block: the higher the difficulty, the stricter the hash requirement. The difficulty in the Bitcoin network was initially set at a minimum level (1.0) when the network launched and increased as the miners' power grew.
How the bitcoin network complexity adjustment algorithm works
The Bitcoin network implements a special algorithm that automatically recalculates difficulty every 2016 blocks. If blocks are found faster than the targeted 20160 minutes, this indicates an increase in the total mining power, and difficulty is increased. Conversely, if blocks are mined slower, the difficulty decreases.
Factors affecting changes in mining complexity
Mining difficulty changes in response to various factors including changes in network hash rate, Bitcoin price, technological advances, power costs, and regulatory measures. All these factors collectively shape the dynamics of difficulty, making it a critical indicator of network state.
The Bitcoin mining difficulty is an important factor that reflects changes in total computational power and miner confidence in the first cryptocurrency. A wide range of factors influences this difficulty, and its dynamics allow assessing the network state and predicting changes in mining economics.
