The measure of how difficult it is to find a new block for a blockchain. It is regularly adjusted to maintain the target block time.
Mining difficulty refers to the measure of how hard it is to find a new block for a blockchain. It represents the expected hash power required to mine a block. As more computational power (hash power) is used to mine blocks, the difficulty is adjusted proportionally to maintain the average block time. This adjustment is a crucial mechanism that ensures the blockchain maintains a consistent block production rate regardless of fluctuations in total network hash power.
In Bitcoin's case, the difficulty is adjusted approximately every two weeks (or every 2016 blocks) to maintain the average block time at about 10 minutes. If blocks are generated faster than expected during this period, the difficulty increases; if slower, it decreases.
Different cryptocurrencies adjust their mining difficulty in different ways, using what's known as the Difficulty Adjustment Algorithm (DAA). Some cryptocurrencies adjust the difficulty over multiple weeks, some adjust it every few days, and some adjust it after every block confirmation. These varying approaches represent different trade-offs between stability, responsiveness to hash rate changes, and resistance to timestamp manipulation.
Bitcoin Cash, for instance, upgraded its DAA in November 2017 to adjust its difficulty after every block, allowing it to respond quickly to changes in hash rate. This improvement helped prevent the extreme oscillations in mining profitability that occurred when miners would switch between Bitcoin and Bitcoin Cash based on profitability.
Frequent difficulty adjustments are valuable to prevent sudden changes in hash rate from causing extreme block times. If the hash rate increases suddenly, without a corresponding difficulty adjustment, it could lead to very fast block times, known as "turbo blocks". Conversely, if the hash rate drops suddenly, it could lead to long periods with no new blocks, a situation known as a "death spiral". Both scenarios can destabilize a cryptocurrency's economic model by disrupting the expected issuance rate of new coins.
In November 2017, Bitcoin Cash experienced a period of rapid block production due to its earlier DAA, leading to a temporary inflation of the coin supply. The subsequent upgrade to a more responsive algorithm (the ASERT DAA) significantly improved stability, making Bitcoin Cash's block times more predictable regardless of hash rate volatility.
The difficulty calculation is typically based on a target value that the hash of a valid block must be below. This target is inversely proportional to the difficulty—a lower target means a higher difficulty. The mathematical relationship ensures that block production follows a Poisson distribution, making block times statistically predictable but individually random.
For Bitcoin and similar cryptocurrencies, the difficulty is calculated using this formula: difficulty = difficulty_1_target / current_target, where difficulty_1_target is a constant defined by the protocol. Miners must find a block hash that is lower than the current target value.
As blockchain technology evolves, new methods for adjusting difficulty may be developed. These could provide more stability and security for blockchain networks, and prevent manipulation of block times. Some networks are already exploring hybrid consensus mechanisms that combine aspects of Proof of Work with other systems.
Ethereum's transition to Proof of Stake with Ethereum 2.0 has eliminated the concept of mining difficulty as traditionally understood, as blocks are created by validators rather than miners. Meanwhile, Bitcoin Cash continues to refine its ASERT difficulty algorithm, representing ongoing innovation in the Proof of Work space to maintain stable block intervals regardless of hashrate fluctuations.
All terms and definitions may update as the Cryptionary improves.