How does mining difficulty affect mining results?
The efficiency of mining depends not only on the value of the cryptocurrency. There is another equally important parameter. It’s called mining difficulty. In this article, we want to talk about what it is, how it works and how it affects the efficiency.
Difficulty describes the base difficulty, or the minimum difficulty the underlying blockchain will accept as a valid block. Effectively this is how hard it is for a miner to find a block (i.e. how hard a math problem miners need to solve). The higher the Mining difficulty is, the harder it is to find a block.
Bitcoin mining is profitable as long as the value of the mined coins exceeds the cost of equipment and electricity. Difficulty is very important for the cryptocurrency process, as it determines how much equipment and how much power is needed. In fact, difficulty helps miners identify the most energy efficient devices that provide the best profitability. Also, the difficulty of mining controls the rate of new coins emission.
In the bitcoin network, the difficulty is recalculated every 2016 blocks and depends on the time it took to find the previous 2016 blocks. If a block is found every 10 minutes (as planned by Satoshi Nakamoto), then finding 2016 blocks will take two weeks.
If the previous 2016 blocks were found faster, the difficulty will be increased, if longer, the difficulty will be reduced. The more (or less) time it took to find the previous 2016 blocks, the more the difficulty decreases (or increases).
Therefore, if you use the power of cloud mining, then its efficiency at some points may drop due to the increased difficulty. But don’t worry, because the difficulty is constantly being adjusted. You just need to wait for the next recalculation, and most likely, efficiency will be increased due to the growing cost of bitcoin.