Bitcoin hash difficulty
Here's a fast way to calculate bitcoin difficulty. It uses a modified Taylor series for the logarithm you can see tutorials on flipcode and wikipedia and relies on logs to transform the difficulty calculation:. To see the math to go from the normal difficulty calculations which require large big ints bigger than the space in any normal integer to the calculation above, here's some python:.
Current difficulty , as output by Bitcoin's getDifficulty. There is no minimum target. The maximum difficulty is roughly: The difficulty is adjusted every blocks based on the time it took to find the previous blocks.
At the desired rate of one block each 10 minutes, blocks would take exactly two weeks to find. If the previous blocks took more than two weeks to find, the difficulty is reduced. If they took less than two weeks, the difficulty is increased. The change in difficulty is in proportion to the amount of time over or under two weeks the previous blocks took to find.
To find a block, the hash must be less than the target. The offset for difficulty 1 is. The key relationship here is that the amount of new hardware becoming available is strongly linked to the demand for it. A risk is that if the people making these miners produce too many, the difficulty will rise so fast that Bitcoin mining profitability goes down massively. This occurred for Dash when the Antminer D3 came out. There are also scenarios that can cause Bitcoin's difficulty to decrease.
August is a good example of this, where a lot of miners moved their hashpower to mine Bitcoin Cash as it was more profitable at the time. This decreased hashpower mining Bitcoin, causing Bitcoin's difficulty to decrease for 2 weeks.
If you stay up-to-date with these types of scenarios and mine the more profitable coins Bitcoin Cash in this scenario , you can get extra coins for 2 weeks and sell them immediately for a great return on investment or just HODL them! Another argument suggesting Bitcoin mining will remain profitable long-term is to look at it from the perspective of large mining operations. If you were a miner running a large setup, and Bitcoin mining was to no longer be profitable, then you'd likely start mining something else that was.
If there were no profitable coins for a long period of time, you'd likely have very high operating costs and be forced to shut down your operation eventually. For a smaller miner running just a few Antminers or some cloud mining, this would be less of an issue.
So in theory as long as Bitcoin stays popular and its price continues to increase, if you can get cheap electricity Bitcoin mining should always stay profitable. This last argument in particular is very speculative, so be aware that for a worst-case scenario if Bitcoin's price was to fall for a long-period of time, even if you had cheap electricity, there's a risk that mining it would no longer be profitable.
In June , the reward for Bitcoin mining will half. This could cause big issues in the long-term as it essentially makes it half as profitable overnight. So if miners are only making a small profit prior to this, they'll then be running at a loss just after it. At this point open-ended contracts on sites like Genesis Mining will likely no longer be profitable although they might not even last that long.
This site cannot substitute for professional investment or financial advice, or independent factual verification.
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.