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What is 'Network Difficulty' and why is it Important?

Updated: Apr 19

Mining bitcoin through the SHA-256 algorithm has always been and always will be a proof of work system, which is an inefficient process by design for added security. More information on that on our videos page. Any device capable of running the algorithm with adequate computing power is able to be rewarded in bitcoin, but there is a catch. The SHA-256 algorithm adjusts itself to the increasing advancements in technology by raising network difficulty, which can be most simply described as how many guesses a machine must make on average to solve a block (or 'find' a block as they essentially guessed the randomly generated combination the blocks 'lock'). Back in 2010 the network difficulty was so low that computers of the era were able to mine with CPU's which are mind-bogglingly slow compared to today's application specific machines (ASIC miners). Until February 10, 2010 the bitcoin network difficulty was 1 which allowed less powerful machines to mine profitably. To put this in perspective the current (April, 2022) network difficulty is a hair over 28 trillion, and there are definitely no profitable CPU miners. Network difficulty adjusts itself based on the premise that every two weeks 2,016 blocks should be added to the blockchain. If more than 2,016 blocks are added over a two week period the difficulty will increase to buffer the rise in computing power and visa versa. In other words, network difficulty increases if more machines are added to the network at the same computing power or the same amount of nodes (miners in a pool that are actively mining) become more efficient at hashing the SHA-256 algorithm. Now, network difficulty is broken down in terms of hashes/solution, describing the amount of guesses required (on average) to find the correct solution and have a chance at being selected to add a block to the blockchain and receive a reward for doing so. If you know your units, you understand that 'Tera-' signifies 1 trillion, so an S19 J pro puts forth, on average, 104 Th/s (104,000,000,000,000 mathematical hashes per second!).


104,000,000,000,000 hashes/s × 3600 seconds/hr × 24hr/day = 8,990,000,000,000,000,000 hashes/day (average)

(Just to give you a bit of perspective on how powerful your S19 J pro is.)


Network difficulty is the key to bitcoin security. Bitcoin operates by allowing the longest chain to validate new blocks. If it were easy for miners to solve blocks, malicious nodes could work in unison to create a long false block and insert it into the blockchain. This would be a huge problem. Such a process could create transactions that never took place, remove real bitcoins from wallets of unsuspecting users, and essentially print bitcoin. This is why fast and efficient miners quickly dominate the market. The higher the difficulty, the less profitable older generations of miners become. increased difficulty will lower the average amount of block rewards and eventually make some miners unprofitable. We saw this in real time during late 2021 when bitcoin was reaching new heights of network difficulty and many S9's and other sub 30Th miners were taken off the network. Once the network difficulty dropped back down they were reconnected and began mining again.






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