How to Track Bitcoin Difficulty
by Jerome Morrow | Aug 29, 2014 | Crypto News
For anyone who is entering the Bitcoin mining industry, difficulty is one of the most important statistics to track on a regular basis. There are plenty of different factors to look at when it comes to figuring out whether or not a Bitcoin mining operation is going to be profitable, and difficulty is one of the more difficult variables to predict. While other costs such as hardware and electricity are somewhat transparent, changes in Bitcoin difficulty can come out of nowhere and have a massive impact on one’s share of the total network hashrate. Let’s take a closer look at the definition of Bitcoin difficulty and how it can be tracked in an efficient manner.
What is Bitcoin Difficulty?
Bitcoin difficulty is basically the metric that determines how hard it is to mine a Bitcoin block at any given point in time. Blocks are mined by solving hashes below a certain threshold with computing power, so changing the difficulty of a block’s hash can have a huge impact on how much computing power is needed to solve the next block. The minimum difficulty is 1, and the maximum difficulty is a number large enough to not have to worry about the limit becoming a problem at any point in the future. The effective maximum difficulty is basically the same as 2^224.
What is the Purpose of Bitcoin Difficulty?
The main purpose of Bitcoin difficulty is to regulate the creation of new bitcoins. The Bitcoin protocol was setup to allow the creation of new bitcoins every ten minutes, and the difficulty is the number that regulates how quickly those bitcoins are created. The Bitcoin difficulty is updated every 2016 blocks to make sure that the blocks are not coming out too fast or slow. In most cases, the difficulty needs to be increased to make it more difficult to mine new blocks on the Bitcoin blockchain. This is due to the fact that there always seems to be more computing power added to the network hashrate on a daily basis.
Why Bitcoin Difficulty is Important for Miners
While most everyday Bitcoin users don’t pay much attention to the current difficulty, it’s an extremely important number in the Bitcoin mining community. When someone is pointing their hashing power at the Bitcoin network, the difficulty basically gives them an idea of how quickly they’ll be able to get a return on their investment. The difficulty is based on the total hashing power of the Bitcoin network, and having a larger share of that hashing power means you have a better chance of mining bitcoins during that period of time.
Bitcoin Difficulty Predictions
Due to the “difficulty” associated with calculating Bitcoin difficulty, there are plenty of websites that can show you the current stat and where it could be in the future. BitcoinWisdom is one of the most popular websites for charting Bitcoin prices, but not many people know that you can also use it to track Bitcoin difficulty. In addition to giving you an estimate on what the next Bitcoin difficulty will be, BitcoinWisdom will also let you know when that adjustment is likely to take place. If you’re interested in simplicity, then bitcoindifficulty.com may be the right option for you. Whatever source you decide to use, you should also remember that you can calculate your possible earnings through Bitcoin mining with the CEX.IO calculator.
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