What is difficulty adjustment in Bitcoin mining?

The Difficulty adjustment (Difficulty Adjustment) ensures that in the Bitcoin network always about every 10 minutes a new block is added to the blockchain. But how does this work exactly? Imagine the number of miners or the performance of the mining hardware suddenly increases dramatically – without adjustment, new blocks would be found much faster. To prevent this and keep the system stable, the Bitcoin network regularly adjusts the difficulty of the mining process.

Why is there a difficulty adjustment?

Bitcoin aims to ensure that the network remains stable and that a block is found regularly (every 10 minutes). This is important to ensure the security and functionality of the blockchain. But what happens if many more miners suddenly participate or the hardware becomes more efficient? Without adjusting the difficulty, new blocks would be found much faster, and this could lead to problems because the network would become congested.

Therefore, the difficulty of the mining process adjusts every 2016 blocks. This adjustment ensures that, no matter how the miners or their hardware changes, a new block will continue to be added on average every 10 minutes.

How does difficulty adjustment work?

The Bitcoin network checks every 2016 blocks to see how long it took to find them. If miners work faster than planned and find blocks in less than 10 minutes, the difficulty is increased. If the blocks are found more slowly, the difficulty is reduced.

A concrete example:

1. Suppose the last 2016 blocks were found in just 13 days (instead of the expected 14 days). This means that the miners are faster than expected, either because more miners are involved or because their hardware has become more powerful.Network solution: The network increases the difficulty to ensure that it takes longer to find a block. The goal is that the next block will, on average, every 10 minutes is found.
2. Another example: The last 2016 blocks were found in 15 days. This means that the miners were slower than expected, perhaps because some miners dropped out or the hardware became less efficient.Network solution: In this case, the difficulty is reduced so that miners can find blocks faster and the 10-minute rule is observed.

What exactly will be changed during the adjustment?

The difficulty in the Bitcoin network is determined by a kind of Threshold This value indicates how difficult it is for the miners to find the next block. As more miners participate or the hardware improves, this threshold is lowered, meaning that the miners have a smaller and heavier number This makes mining more difficult. If there are fewer miners or the hardware isn't as powerful, the threshold is raised, and it becomes easier to find the correct block.

A clear example:

Imagine you are playing a simple dice game: you roll a die and must roll a number that is less than or equal to a certain number to win.

1. First round: You must enter a number less than or equal to 4 Roll the dice to win. So you have a good chance of winning because 4 out of 6 possible numbers will win you (1, 2, 3, 4).
2. Then more and more people join the game or you get a faster dice that allows you to roll more often. Now the game master adjusts the difficulty to keep the game fair. New rule: You now have to enter a number less than or equal to 2 Roll the dice to win. Now you only have 2 of 6 possible numbers to win with, which makes the game significantly more difficult.
3. Suppose there are fewer players or the dice roll slows down. The game master adjusts the difficulty again to make it fairer. Now you have to choose a number less than or equal to 4 Roll the dice to win. The probability of winning is thus increased again.

Conclusion: Why is difficulty adjustment so important?

The Difficulty adjustment ensures that the Bitcoin network remains stable, no matter how external circumstances change. No matter how many miners participate in the network or how powerful their hardware is, the adaptation ensures that the 10-minute rule for finding new blocks. This makes the network not only stable, but also secure and predictable.