The price of BTC has broken new highs since mid-December, resulting in higher and higher computing power and mining difficulty of the entire network.

At present, the difficulty of Bitcoin mining is 20.6T, breaking through 20T for the first time in history. It is predicted that the next difficulty will increase by 5.76% to 21.79T.

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What is mining difficulty?

Bitcoin's network-wide difficulty is a special parameter of the proof-of-work (POW) calculation algorithm, indicating how likely it is to use computing power to find new blocks and get rewards.

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Why is the difficulty parameter quoted?

1. Since the average block generation time pursued by the Bitcoin system is 10 minutes, but the computing power of the entire network has been rising, it is necessary to adjust the difficulty to achieve the goal.

2. Whether it is Bitcoin or other cryptocurrencies, as long as the mining income is higher than the cost of mining equipment and electricity, then mining is profitable.

The difficulty of mining is critical to the mining process as it determines how much equipment and electricity it takes to mine a coin.

The difficulty index can also help miners quickly and accurately find mining machines suitable for their profit goals. The yield calculation formula is described below.

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What are the adjustment methods of mining difficulty?

The first method: recalculate and adjust after generating a fixed number of blocks, such as BTC and LTC, every time 2016 blocks are generated, the average block speed of these 2016 blocks is recalculated to adjust the difficulty .

In this case, the selection of the new difficulty value should keep the block time unchanged, and the mining difficulty is presented to show the average range, as shown in the figure below.

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How does mining difficulty change?

In the Bitcoin network, each difficulty update is recalculated by 2016 blocks and depends on how long it took to find those 2016 blocks.

If, according to Satoshi Nakamoto's original vision, the planned 21 million bitcoins are issued by discovering a block every 10 minutes, then it will only take 2 weeks to find 2016 blocks, so the mining difficulty of bitcoin Basically adjust every 14 days.

The consensus on difficulty adjustment is that if the average block time of the previous 2016 blocks is shorter, the difficulty will increase, otherwise, the difficulty will decrease. In summary, the longer it takes to find the 2016 block, the greater the possibility that the difficulty coefficient will decrease, and vice versa, the difficulty will increase.

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What does computing power depend on?

Hashrate depends on a number of key parameters, including the mining algorithm of the chosen cryptocurrency. For example, a miner using the SHA256 algorithm, which provides the best performance on the Bitcoin network, will be significantly less efficient on the Litecoin network.

In addition, hardware specifications are also very important, and the products of each manufacturer are different. If you want to become a miner, you can first study the parameter information of the mining machine in order to choose hardware products with higher cost performance.

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Since 2017, the difficulty of Bitcoin mining has increased dramatically. Until November 2018, with the sharp collapse of the market, the difficulty stopped increasing, and at the same time, the computing power of the entire network began to decrease on the original basis.

The same is true for other cryptocurrencies, where the difficulty increases during a bull market and decreases during a bear market. There is usually a slight lag in difficulty changes, though.

Experts have observed that in a certain period of time, the difficulty of some leading altcoins increases by an average of 8% per month. If this growth rate is maintained for 9 months and the currency price fluctuations are not large, then after 9 months The profit margin of mining will be close to zero.

Summarize

Summarize

If you are looking for a coin with low mining difficulty, please consider the size of the mining revenue and its development prospects. Even if the speed of block generation is fast, don't be too optimistic, because the difficulty may increase with it. If the exchange rate is weak, converting to fiat won’t even cover electricity bills, let alone make a profit.

We recommend that miners keep track of the mining difficulty index as an essential element of a comprehensive trading strategy. The cryptocurrency market is still very young and has not yet formed its own set of techniques and forecasting methods like the stock and foreign exchange markets, so the more information you get, the more accurate your judgment will be.

Article source: mining-cryptocurrency.ru

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Edit: Vatican XVI

Produced:OKKONG Content Team

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