Bitcoin’s Blockchain DNA for Difficulty Adjustment Influences Bitcoin’s Longevity in the Best Way


Bitcoin mining equipment in China has been facing a precarious situation. There have been various reports and videos over Thanksgiving weekend showing closure of bitcoin mining equipment and many surmise that the closures have to do with bitcoin’s decline in price.

The good news is that closure of such mining facilities does not necessarily mean that bitcoin will shut down as a result. Bitcoin’s fundamental design ensures that if there are mining rig shutdowns, bitcoin’s protocol enhances incentives for miners to remain online. Breaker Mag points to this quality as what prevents bitcoin from truly disappearing. This type of system is called difficulty adjustment.

To best understand difficulty adjustment, it is useful to know how mining works. Essentially, blocks are added to transactions on the bitcoin ledger through a mining node. The node is rewarded with a new bitcoin. The process also describes proof of work, which requires miners to solve a cryptographic puzzle. The mining rig process is complicated and those who succeed at finding the random solution will receive the reward. The random quality is integral to difficulty adjustment. When 2016 blocks go through the system, bitcoin readjusts the difficulty of locating blocks by altering the range of solutions that miners attempt to guess. The difficulty also depends upon the network’s mining power.

With less mining power, the difficulty adjustment is mitigated. On the other hand, more power and competition leads to more difficulty. At the end of the day though, bitcoin’s protocol is also impacted by processing power, electricity, and time. There are reports showing that adjustment difficulty has been decreasing.

The difficulty adjustment decrease may lead to a reduce the costs involved with block mining and it may then make it easier for miners to profit. One of the few factors that does not change is the cost of electricity, which is quite a lot per bitcoin. Some estimate that it costs $2,500 to mine one block.

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