Ethereum (ETH) Mining Difficulty Changes; What You Need to Know
Ethereum Mining simply means securing the network by verifying transactions and generating blocks that build up the blockchain.
Ethereum currently employs a proof-of-work algorithm called “Ethash”
This algorithm was designed to be memory-hard, meaning that it initially made it unprofitable to mine ether using ASICs. However, that changed when it was revealed that Bitmain had developed an ASIC miner for Ethereum.
It has however been known since 2015 that Ethereum will is going to transition to the proof-of-stake (PoS) consensus mechanism once it fully implements the Casper protocol.
There are four phases that were set in the developmental milestones of the Ethereum ecosystem.
- Metropolis; and
At the moment, the platform is in the Metropolis phase.
Serenity will be the final phase upon which Casper will be implemented. However, the developers at Ethereum introduced something called “a difficulty bomb”. This was referred to as Ice Age.
It is the period between the switch from the PoW to the PoS system. Recently, Ethereum classic had to undergo a hard fork to diffuse the same protocol and avoid having to switch.
The “bomb” will make it pointless to continue mining on the PoW chain.
Mining difficulty simply means that a miner is required to solve a given mathematical algorithm to be able to mine ether.
The difficulty refers to how tough it is to correctly solve the algorithm. It is measured in hashes.
A hash rate, on the other hand, refers to the speed at which the mining equipment completes the mining process. It is mostly measured in tera hashes per second (TH/s).
The higher the hash rates the more ether one can mine and the more profitable it becomes. Mining difficulty increases with increase in the number of miners joining the network.
For instance, Ethereum’s average mining difficulty on January 1, 2017, was 79.895 TH/s.
That rose to 2917.998 TH/s by October 14, 2017, as mining became more profitable, but with an influx of miners.
The difficulty keeps on increasing and reached 3486.661 on June 27, 2018.
The above chart shows that mining difficulty has been increasing over time. According to the information, difficulty levels spiked in 2017 as mining became a hit and many miners joined.
Mining difficulty is adjusted dynamically to make it possible for one block to be generated within at least 10- 19 seconds.
It is adjusted from one block to the other, based on the time difference in block time. It has been an average of 12 seconds, though that has been affected before due to scalability issues.
For example, if the difference between the previous blocks is within 0-9 seconds, then difficulty increases.
If it goes beyond 20 seconds, then the difficulty adjusts down. That explains why the mining difficulty fell dramatically between October 14 and October 17, from 2917.998 TH/s to 1430.794 TH/s.
Here is a simplified understanding of Ethereum mining difficulty changes. If you want to calculate the mining difficulty for the next block, find the difference in mining time for the last block.
If the time difference exceeds the set limits (beyond 20 sec), then the difficulty will adjust down to make it easier or quicker to mine the next block.
However, if the difference falls below (less than 10 sec), then the difficulty will adjust upwards to make mining the next block much quicker.