Difficulty

What Is Difficulty?

In contrast, if blocks take too long to find, difficulty decreases, raising the target. This target is a number that is reset periodically. To successfully mine a block, the miner must find a hash lower than this number.

How Mining Works: A Simplified Example

We can use a simple example here. Suppose that we have the term “binance,” and we want to produce a SHA256 hash whose output is numerically lower than a specific target that corresponds roughly to hashes beginning with a certain number of zeros in their hexadecimal form. 

In real mining, miners try to find a hash value lower than the target number, which is a very large number represented in 256-bit format. We can illustrate this by iteratively adding numbers to “binance” (e.g., “binance1,” “binance2,” “binance3”) and hashing it until we get a hash output that meets a simplified criterion such as starting with leading zeros.

This should give you an idea of how mining works, with the difference being that miners are attempting to find a number that falls under a target. The lower this target, the harder it is to find a solution, which is why Bitcoin consumes so much computational power. Miners are hashing variations of the same information repeatedly to find a valid hash.

Difficulty Adjustment

Bitcoin adjusts its mining difficulty approximately every 2016 blocks (about every two weeks) to maintain the average block time of 10 minutes. This adjustment is based on how long it took to mine the last 2016 blocks. If the blocks were mined faster than expected, difficulty increases to make mining harder; if slower, difficulty decreases to make mining easier.

Mining Hardware Evolution

Mining has become an industrial-level activity dominated by large mining farms with specialized equipment, reflecting the competitive nature of the network and increasing difficulty.

Not All Cryptocurrencies Use PoW

Conclusion