Mining Difficulty Meaning

What Is Mining Difficulty?

In proof-of-work (PoW) blockchains, network participants known as miners validate transactions and successfully include new blocks in the blockchain. The mining process –  which demands significant computational resources – involves several individual miners (or mining pools) competing with each other to solve a complex computational puzzle. The first one to do so successfully earns rewards in exchange for their computational energy and resources.

. Mining difficulty is the metric for gauging how difficult and time-consuming producing a block is. Typically, the difficulty of mining blocks increases as the number of miners in the network increases, and decreases as the number of miners decreases. For example, Bitcoin’s difficulty level was 1.873 trillion as of December 19, 2012. By February 18, 2024, the difficulty had risen to 81.7 trillion, reflecting the growing number of miners in the network.  

Mining Difficulty in Bitcoin

The typical block time – the average time taken to gather and compile individual transactions into blocks – for Bitcoin is approximately 10 minutes. To uphold this consistency and prevent blocks from being produced too quickly or too slowly, Bitcoin mining difficulty undergoes adjustments at fixed intervals. 

Specifically, Bitcoin undergoes a crucial adjustment after every 2,016 blocks mined(roughly every two weeks). This happens because the network changes what is known as the target value. To explain, Bitcoin miners are required to calculate a fixed-length string of text, called a hash, to successfully mine a block. What’s more, for the hash to be valid, it must be equal to or smaller than the target value. The larger the target value is, the harder it is for miners to find a valid hash. In other words, the network increases the target value when it needs to slow down the block time, and decreases the target value when it needs to speed up the block time.