Glossary

Mining Difficulty

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The mining difficulty of a cryptocurrency is how difficult it is to find the right hash for the next block.

What Is Mining Difficulty?

The mining difficulty of a cryptocurrency is an indication of how difficult (as well as time-consuming) it actually is to find the right hash for each of the blocks. Mining difficulty can be defined as a measurement unit that is used in the process of Bitcoin mining (as an example). The difficulty indicates how difficult it is to solve the complex cryptographic puzzle in question. The difficulty of mining new blocks can either increase or decrease over time, and this is highly dependent on the number of miners within the network. The more miners there are, the more difficult the cryptocurrency is to mine. Increases in the difficulty, however, are usually a requirement due to the fact that they essentially keep the target block time stable. 

Let's use Bitcoin as an example. When a cryptocurrency becomes popular, the number of computers that participate within the peer-to-peer network increases as a result. The miners compete against each other for limited block rewards, and with more participants, as well as a lot more computing power, the hashpower of the entire network increases.

Now, the average block time for Bitcoin is 10 minutes give or take, so in order to maintain this level, the difficulty has to be adjusted.

Mining difficulty is adjusted after 2,016 blocks, specifically for Bitcoin, or in other words, after that number of blocks has been mined. An adjustment of the difficulty up or down is dependent on the number of participants within the mining network as well as their combined hashpower.

The first miners used CPUs to mine Bitcoin, but eventually came to the conclusion that graphics cards (GPUs) are better suited for mining. In recent history, special ASICs have been developed specifically for the mining process. Bitcoin as well as other digital currencies are mined through mining pools, where a lot of miners join together and combine their hash rates in order to get block rewards.