Mining difficulty is measure of how difficult it is to find a hash below a given target. For example, the Bitcoin network, or another Proof-of-Work (PoW) crypto network, has a global block difficulty.
Valid blocks must have a hash below a specific target. Mining pools also have a pool-specific share difficulty setting a lower limit for shares.
Looking at the Bitcoin network specifically, mining difficulty is designed to adjust every 2016 blocks, or approximately every two weeks.
This adjustment is dictated by changes in the network’s hashrate and occurs regularly.
Such changes constitute an attempt to ensure that the network continues to solve new blocks at a rate of one every 10 minutes.
What Determines Mining Difficulty?
Mining difficulty is determined by several factors, including how many miners there are on a cryptocurrency network.
As difficulty increases, miners need increasingly complicated (and expensive) equipment to keep up.
If the hashrate during the past two weeks has increased, then this surmises that the difficulty will go up as well, making mining more challenging.
However, if the hashrate has dropped, the difficulty level will decrease, making blocks easier to solve. This scenario is extremely uncommon.
There is no maximum mining difficulty for the Bitcoin network.
If use of the Bitcoin network continues to increase, the mining difficulty of the Bitcoin network could also increase until all Bitcoins are mined.
Eventually, a situation can occur in which a relatively large proportion of miners cannot keep up with mining constraints.
Under these circumstances, miners are forced to capitulate and stop entirely.
The hashrate would consequently decrease and, eventually, the difficulty would receive a downward reset.