We keep talking about the bitcoin mining difficulty but what the hell does it actually mean? How is it determined and how does it impact your ability to mine that sweet sweet bitcoin? All great questions and hopefully the answers are below.
Mining difficulty refers to how hard it is to actually solve a hash and release a block of bitcoin. Currently each block contains When a block is solved, The mining difficulty across the bitcoin network is adjusted at set points to ensure that a steady stream of bitcoin is being released to the world.
The mining difficulty is adjusted automatically each time blocks are solved. The goal is to keep the block solution time to about 10 minutes from the global hashing rate. Roughly every 10 minutes This ensures that a steady supply of bitcoin are released until the overall supply of bitcoin that can be created is exhausted.
No more, no less. The bitcoin mining difficulty is adjusted about every two weeks. It was adjusted last night and is predicted to adjust again around two weeks from now. This is the easiest way to think about it. Essentially, the more mining that is occurring. The more hash rate there is globally, the faster the bitcoin will be mined. In turn, the higher the difficulty will adjust in order to keep to the 10 minute block goal. Conversely, when total hash rate goes down, bitcoin mining is slower and the difficulty would adjust lower to again, keep to the 10 minute block goal.
Let us use some simple math for a minute just to get an idea of how this impacts your mining. I know, I know, suspend disbelief with me for a moment. Lets see how that works. It works the same way when the difficulty decreases but in the opposite direction. You would be receiving more bitcoin for the same hash rate. You can overcome the mining difficulty increase in 1 of 2 ways. First, if the price of bitcoin raises and out paces the difficulty increases you will continue to make money at the same hash rate.
Second, you can continue to purchase more hash rate to outpace the difficulty increases. With hashflare you have he ability to reinvest your daily bitcoin mining payouts which will help you outpace the difficulty increases. In addition to that the price of bitcoin is overall on a steady incline so I continue to personally invest.
Because of the inability to predict the future mining difficulty changes and the day to day price of bitcoin, it is almost impossible to predict future performance with any accuracy. Anyone that tells you they can, is simply not being honest with you. For bitcoin mining and crytpo investing it is best to follow the golden rule.
Do not invest more than your willing to lose.
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