An article to understand the history of mining difficulty adjustment: In 2010, the annual growth rate of difficulty reached 1224363%, and this year it is only 0.82%

Original author: Jurica Bulovic, head of Bitcoin mining at Fidelity

Original translation: Lu Jiangfei, Lianwen

Exploring the history of Bitcoin mining difficulty adjustments: In which year did Bitcoin mining difficulty increase and decrease the most?

The mining difficulty of the Bitcoin network has decreased from 16.6 T to 13.9 T, a decrease of 15.95% and the second largest drop in history. Here, we will explore the history of Bitcoin mining difficulty adjustments based on Coin Metrics data.

The Bitcoin Genesis Block was created on January 3, 2009, and the mining difficulty also started from "1", and there was no change for a whole year. Why did the mining difficulty not change at all? Didn't Satoshi Nakamoto perfectly design the Bitcoin block time to be around "an average of 10 minutes"?

In fact, in the first year of Bitcoin’s birth, the mining difficulty actually decreased many times (for example, it took the Bitcoin network more than a month to mine 2016 blocks), but because the mining difficulty cannot be lower than 1, this number has remained unchanged.

The following chart shows the number of Bitcoin blocks mined per day throughout 2009. You can see that most blocks were mined with a number below 144, which is the expected average. In 2009, the average block time was about 20.8 minutes.

On December 30, 2009, the difficulty of Bitcoin mining was adjusted for the first time, increasing from 1 to 1.1829, an increase of 18.29%. In the second year, that is, in 2010, the difficulty of Bitcoin mining continued to increase, from 1.18 to 14.5K, an increase of 12,245 times!

In fact, since then, Bitcoin mining difficulty has increased every year, trying to keep up with price increases.

The following is a list of the annual growth rates of Bitcoin mining difficulty since 2009:

2009: 18.29%

2010: 1224363% (GPU mining started)

2011: 7908%

2012: 157%

2013: 39,533% (ASIC mining started)

2014: 3341%

2015: 156%

2016: 206%

2017: 490%

2018: 191%

2019: 130%

2020-to-date: 0.82% (up 20% YTD in 2020 until the most recent mining difficulty drop)

The following chart shows the trend of mining difficulty since the inception of the Bitcoin network:

There is another statistic worth noting: the mining difficulty of the Bitcoin network has changed a total of 294 times, of which the mining difficulty has increased 246 times and decreased 48 times.

The following chart shows the historical changes in Bitcoin mining difficulty (%). Note: The Y axis is limited to 100%, but there was actually an outlier of 300%.

Among the Bitcoin mining difficulty increases, the top three are:

On July 16, 2010, the increase was 300% (it is worth mentioning that this is the maximum increase in mining difficulty designed by Satoshi Nakamoto);

In the three days before July 13, 2010, the increase was 93.12%;

On May 26, 2011, the increase was 78.15%.

Among the 246 mining difficulty increases, 120 increases were in single digits, 125 increases were in double digits, and 1 increase was an astonishing triple digit!

Next, let’s take a look at the reduction in Bitcoin mining difficulty:

The first drop in Bitcoin mining difficulty occurred on May 19, 2010, with a drop of 7.81%. In addition, the three largest drops in Bitcoin mining difficulty were:

On October 21, 2011, the decline was 18.03%;

On March 26, 2020, the decline was 15.95%;

On December 3, 2018, the drop was 15.13%.

In addition, there have only been five times in Bitcoin’s history when the mining difficulty has dropped by double digits!

Some additional benefits tips:

What does Bitcoin mining difficulty represent?

The Bitcoin block header consists of three sets of block metadata. The first is a set of data that references the parent block hash. This set of metadata is used to connect the block to the previous block in the blockchain. The second set of metadata, namely difficulty, timestamp and nonce, is related to mining competition. The third set of metadata is the merkle tree root (a data structure used to efficiently summarize all transactions in a block). In order for a block to be valid (also known as "mined"), the block header hash must be below a certain value L (called the target value). The range of hash values ​​can be very large (2^256), but the target value set is much lower.

In practice, the target value L is adjusted every 2016 blocks mined, proportional to the increase/decrease in the time required to mine a block in the previous period. The mining difficulty D is derived from the target value L. Intuitively, the smaller the target value L, the more difficult it is to find a valid hash.

For example, if the average block time for a given period is 11 minutes (10% longer than the expected 10 minute interval), then the next Bitcoin mining difficulty will increase by 10%.

The current mining difficulty value is: 13,912,524,048,945. This number means that mining a Bitcoin block is much more difficult than the original difficulty. Therefore, you can also understand that the Bitcoin network now needs to spend 13,912,524,048,945 times more hashes than the initial block to find a block.

Finally, I want to share an interesting thing: what would it be like if the Bitcoin network had no difficulty adjustment mechanism and still had the current network computing power? If so, the average time to mine a block would be 4.3*10^-11 seconds. In other words, we can mine 2.32*10^10 blocks in one second.

Source link: twitter.com

Original translation link: https://www.chainnews.com/articles/311404659475.htm