What does Bitcoin mining difficulty mean? | Bitpanda Academy Lesson 9

Описание: The mining difficulty of a cryptocurrency such as Bitcoin indicates how difficult and time-consuming it is to find the right hash for each block.

Mining difficulty changes depending on whether the total Bitcoin hash power consumed by the network has also increased or decreased. In this video we will cover Bitcoin Mining, and how it impacts us in the cryptocurrency space.

For more information on the question “What does mining difficulty mean?”, Bitcoin technology and cryptocurrency check out the text-version of Bitpanda Academy Lesson 9: https://www.bitpanda.com/academy/en/l...

Video Chapters:
00:00 - Intro
00:54 - What are mining pools?
01:51 - What is Bitcoin mining difficulty?
02:12 - How is Bitcoin mining difficulty calculated?

#crypto #mining #bitpanda #bitcoin #cryptomining #bitcoinmining


▬ What are mining pools? ▬▬▬▬▬▬▬▬▬▬▬▬
Let’s start with hashpower and mining.
Solving the mathematical puzzles for new blocks on the bitcoin blockchain requires huge amounts of computational power. Because there is such a need for power, this leads to miners joining forces and coming together in Bitcoin mining pools and solving mathematical puzzles together leading to the first individual miner or the mining pool that finds the right hash gets the block reward.
So, if you’re the individual miner, then you receive the rewards, and in a mining pool, block rewards are split among participants in proportion to their share of computing power in the mining pool. With this, the so-called “hashpower” of the entire network increases accordingly.
As a cryptocurrency like Bitcoin becomes more popular, the number of computers participating in its peer-to-peer network increases. Miners compete against each other for limited block rewards.

▬ What is Bitcoin mining difficulty? ▬▬▬▬▬▬▬▬▬▬▬▬
Mining difficulty in the Bitcoin network indicates how difficult and time-consuming it is to find the right hash for each block and solving the mathematical puzzles for the valid block creation requires huge amounts of computational power. Because the difficulty is rising continually, miners join forces in Bitcoin mining pools and solve the mathematical puzzles together. The first individual miner or the mining pool that finds the right hash gets the block reward.

▬ How is Bitcoin mining difficulty calculated? ▬▬▬▬▬▬▬▬▬▬▬▬
Bitcoin was created with the intention that 2016 blocks take 2 week to mine.
If the blocks are created in a shorter period of time, then the difficulty is automatically adjusted.
If the hashrate is longer or shorter than the intended 2 weeks, for example if it took only 10 days it means difficulty is too low and therefore will be increased by 40% ensuring that it will now take 2 weeks to find 2016 blocks.
It’s important to note that Bitcoin mining difficulty can both increase and decrease. Generally, the difficulty will decrease after the network hashrate drops.
So why does it happen? This is to eliminate the risk of hackers buying very fast computers to create new blocks and potentially override the bitcoin system. An adjustment of difficulty upwards or downwards depends on the number of participants in the mining network and their combined hashpower.
In summary, mining difficulty indicates how difficult it is to solve a complex cryptographic puzzle in the process of Bitcoin mining. The difficulty of mining increases or decreases over time, depending on the number of miners in the network.

▬ About Bitpanda ▬▬▬▬▬▬▬▬▬▬▬▬
Bitpanda is a fintech based in Vienna, Austria and was founded in 2014 by Eric Demuth, Paul Klanschek and Christian Trummer. Bitpanda has 2 million users and more than 400 team members. With a PSD2 payment service provider licence, state-of-the-art security and streamlined user experience, Bitpanda has grown into a popular trading platform for newbies and experts alike. The goal is to tear down the barriers to investing and personal finance through digital assets and blockchain technology like cryptocurrencies, precious metals, fractional stocks and ETFs and to bring traditional financial products into the 21st century

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