ETH network difficulty chart

Experts consider Ethereum one of the most promising cryptocurrencies. You can read about the value of this asset in the article "Ether against US dollar."

If you want to get a deeper understanding of the world of Ether, you need to learn about the difficulty of ETH mining. Here's an overview of the concept, what the difficulty of mining depends on, and what changes will be affecting miners in 2022.

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• Terms and definitions
• Difficulty bomb
• What affects mining
• Chart
• Prospects
• Conclusion

Understanding mining difficulty

Mining is one of the ways to get ETH. This process implies using hardware to confirm transactions.

The Ethereum network unites miners around the world. They receive coins for making calculations. Thus, they mine coins on a regular basis.

ETH mining is in high demand. According to statistics, the popularity of ETH mining is at the forefront.

If you want to start earning on ETH mining, you should take into account the ether mining difficulty. It is measured in hashes and shows how much work the miner's equipment has to perform to mine a block.

Thus, the concept of labor intensity is directly related to the capacity of computers or entire mining farms.

What is the purpose of mining difficulty?

First, it balances the Ethereum blockchain. This involves controlling issuance to prevent coins from depreciating. For example, when a large number of miners join mining and the hash rate of the ether network increases, it seems that the issuance should also grow. However, a kind of 'fuse' automatically turns on, and mining becomes more difficult. If there are fewer miners, the opposite happens. As a result, the emission of ETH returns to normal, and the system remains intact. Second, the labor intensity of ether mining makes it possible to predict its profitability. If the costs of equipment and electricity are higher than the remuneration, the miners' work does not make economic sense. Since it is difficult to calculate the profit by yourself, there are special services designed for this purpose. For example, Minerstat, CryptoCalc, and BitInfoCharts.

Features

When Ethereum blockchain was only being planned, its creators, including Vitalik Buterin, were going to launch it on the PoS algorithm. However, due to technological complexities, the network was based on the simpler PoW mining technology.

Nevertheless, the developers have not abandoned their plans for Proof of Stake. They just postponed the introduction of this algorithm.

The creators made a radical decision so that the existing mining technology would not split after the new algorithm was launched and all the miners would switch to it. They created what is known as an Ethereum difficulty bomb. It increases ETH mining difficulty to the point where calculating new blocks would become very difficult or even impossible. According to the developers, it will force miners to switch to PoS and forget about Proof-of-Work for good. They want to detonate the bomb when the Proof-of-Stake launch is ready. The only thing is that the deadline has already been postponed several times and is not included in the original plans of the developers. The explosion would have happened a long time ago if not for updates to the Ethereum network. Only they were able to keep miners online and save the Ethereum blockchain. The last hardfork took place at the end of 2021. It assumes a switch to PoS in mid-2022 at the earliest. The new version will be called Ethereum 2.0.

Mining difficulty factors

We have already mentioned that the labor intensity of ETH mining depends on the network's hash rate. When the power is higher, the first indicator also increases.

In addition, the difficulty of ETH mining is affected by other factors.

Every miner is interested in making a profit from digital coins. Otherwise, mining makes no sense.

Therefore, work intensity depends on ETH quotes and the cost of electricity needed to mine blocks. The more expensive the coin and the lower the cost of mining, the more miners come online, thus increasing the difficulty.

Also, this indicator depends on the technological process. It's no secret that more advanced equipment speeds up mining.

The next factor is the reward that miners receive for mining new blocks. Larger rewards lead to more motivation for miners..

At the moment of writing, it was 2 ETH. Earlier, rewards stood at 5 ETH, but were later reduced to 3 ETH. Market sentiment also has a strong impact on mining. During bear markets, the number of miners declines, pushing down mining difficulty, and vice versa..

ETH mining difficulty

When Ethereum was launched in 2015, it was not particularly well-known. It lacked miners and had a very low difficulty of 0.1 TH.

Terahashes (TH) are one of the commonly used units for measuring the difficulty of Ethereum mining per second. It is equal to one trillion hashes.

Over the next few months, Ethereum's mining difficulty reached 8 TH, which was still lower than what the developers had planned.

The difficulty jumped significantly in 2016, surpassing 80 TH.

This jump was attributed to the increasing popularity of the altcoin, coupled with the appearance of mining pools. As Ethereum went up, mining difficulty also increased. In the autumn of 2017, the difficulty hit 3,000 ETH. Without a hardfork, it would have triggered the difficulty bomb mentioned above. A resulting update decreased mining difficulty twofold, but it resumed climbing immediately afterwards. The difficulty surpassed 2,000 TH or 2 PH (petahash) in December 2017, and 3,000 TH (3 PH) in the first few months of 2018. With another difficulty bomb threat looming, an early 2019 update brought down the difficulty below 2 PH, but its effect was only temporary.

The mining difficulty once again skyrocketed in 2021 and continues to climb today. At the moment of writing, it stood at 12.7 PH.

That means a miner should carry out that number of operations to mine an ETH block and receive a 2 ETH reward.

Outlook

The year 2021 saw Ethereum's price surge to record highs. This, in turn, boosted the difficulty of mining this altcoin.

Analysts are convinced that Ethereum attracted the attention of investors last year because of its features, particularly DeFi and NFTs.

They believe these features will play an important role in the future, which will affect the increasing difficulty of mining ETH.

At the moment of writing, Ethereum was trading around $2,990 with a market cap of $359.2 billion.

These are good results. ETH is the fifth most valuable digital currency and has the second-largest market capitalization.

These factors are also required for Ethereum to advance.

If ETH rises within the next month or two, it will start an upward trend. The difficulty will also increase depending on the extent of the upside movement.

Analysts predict that it could reach 13.3 PH by the summer of 2022. As mining becomes more difficult, its profitability usually decreases.

At the same time, they point out that the transition to Ethereum 2.0 will finally take place in the second half of the year. It will replace the proof-of-work (PoW) algorithm with the proof-of-stake (PoS) one, ending ETH mining in its current form. Development efforts are already underway. The first and second versions of Ethereum already run simultaneously, with the merge planned to take place this year. After the merge, PoW mining will become unavailable and the emission of ETH will be done via staking. Staking offers users some passive income for the coins they hold. It can be compared to dividends paid on shares of companies and corporations. There is already an opportunity to make money on Ethereum 2.0. To do so, you need to become a validator and have at least 32 ETH in your account. One important benefit of switching to PoS is the move away from the use of expensive mining equipment. This will make the Ethereum network more energy-efficient and environmentally friendly. This will also solve scalability problems and reduce commission fees. However, ETH miners will have to switch to mining other coins or quit mining altogether and sell their expensive hardware.

Conclusion

Many analysts say 2022 is a unique year for Ethereum. The upcoming events may change the cryptocurrency's concept completely.

Without even going into the technical details, it is safe to say that Ethereum will not only improve its feature set. It will also become a proper profit-making instrument available to everyone.

Staking minimizes all risks and does not require any special knowledge and skills on the part of the user.

Furthermore, buying ETH these days is not difficult. To do this, you need to choose a suitable platform, such as the IFXBIT crypto exchange, and invest in this cryptocurrency.

Read more: “Ethereum’s yearly performance” “How much does ETH cost in USD?” “Ethereum outlook”