Many in the Ethereum community are likely aware that Ethereum's code features something called the ‘difficulty bomb,' which is a piece of code that was supposed to create a negative incentive for miners and developers. The idea behind its inclusion is to provide incentive when it comes to managing the move from PoW to PoS. In other words, the difficulty bomb was supposed to raise the mining difficulty per block over time.
However, when the bomb started doing the thing for which it was designed for, it was delayed. The first time this happened was in June 2017, followed by another delay in October 2017. Now, the bomb is preparing to ‘go off' once again, which is why another hard fork is planned to happen, in hopes of pushing the effect further.
According to reports from Etherscan, a blockchain analytics website, Ethereum has seen a very low level of daily block rewards this Monday. The rewards only included around 13,131 ETH, when it is typically above 20,000 ETH per day. Furthermore, the decline in the number of mined coins has been noticeable ever since December 2018, which was also caused by the reduced number of mined blocks.
If the issue does not get addressed soon, it might lead to record lows within only two or three months. However, it will likely not come to that, as the bomb is expected to get another 12-month-long delay due to a system upgrade called Constantinople, which will launch later this month. The upgrade is expected to arrive after the miners ‘solve' Ethereum's 7,280,000th block, and it is expected to stabilize the number of mined blocks to around 5,700 per day.
As mentioned, similar upgrades needed to be introduced in the past, and at this point, the bomb serves as more of an annoyance than an actually useful feature.
The Difficulty Bomb Is Not Going Away Yet
According to Afri Schoedon, the release manager at Ethereum's client, Parity — Ethereum's transition to PoS consensus (also known as Serenity, or Ethereum 2.0) will likely take more time than previously thought. Schoedon predicts that it is unlikely to happen in 2019, and possibly not in 2020 either. This probably means that the difficulty bomb might return a few more times in the future before the move to PoS becomes a reality.
However, while it still undoubtedly remains an annoyance, the difficulty bomb has a positive effect too — it forces developers to come up with new system-wide upgrades. The previous one, which occurred in the fall of 2017, is known as Byzantium, and it came just when Ethereum started experiencing a record low in the number of mined blocks.
The mining difficulty grew by a factor of two, which resulted in the block time becoming twice as long, reaching as much as 30 seconds per block. This time, however, developers believe that it will not come to such extremes, as Constantinople is expected to come before the mining difficulty goes up.
Furthermore, the new upgrade will bring the reduction of block reward issuance from 3 ETH to 2 ETH, which is Ethereum's version of Bitcoin halvening.
As for Serenity, the only thing that developers are able to predict at this point is the launch of its testnet at some point in March 2019. It is simply too early to tell when the actual transition will take place.