Bitcoin miners are switching off their rigs as the cost of mining bitcoins outstrips their income. The falling price of BTC means that smaller miners have struggled, and now the results of the crypto recession are filtering through to the underlying infrastructure.
How does Difficulty work?
Bitcoin mining involves computers dedicating processing power or ‘hashrate’ to the network. Collectively, the computers on the Bitcoin network look for the solution to a very specific mathematical problem. The winner of the puzzle gets to add the next block of transactions to the blockchain, and receives a tranche of new coins and transaction fees as their reward.
As more processing power is added to the network, it takes less time to find the answer to the problem. Therefore, Satoshi’s design increases ‘Difficulty’: it makes the problem harder to solve. This means that, on average, it always takes 10 minutes for the entire Bitcoin network to create a new block. Difficulty is adjusted every 2,016 blocks, or around 2 weeks.