Decoding Bitcoin Mining Difficulty: Is It Really That Complicated?

Mining difficulty is a key metric in the bitcoin network that determines how difficult it is to mine a new block. Simply put, complexity reflects the amount of work (computation) that miners need to perform to successfully find a block.

This parameter is directly related to the security and stability of the network: high complexity makes the network more secure from attacks, but at the same time increases the demands on the processing power of miners.

Let's understand how the mining complexity is organized, how it affects the bitcoin network and what changes in the parameters indicate.

What is mining difficulty in simple words

Mining complexity is a number that shows how many times, on average, miners need to calculate a hash function to find a single block in the bitcoin blockchain. On each attempt, the miner generates a random value (nonce) and calculates a hash of the block; if the resulting hash satisfies a certain condition (below a target level set by the network), the block is considered found.

The complexity of the mining operation essentially sets this condition: the higher the complexity, the stricter the hash requirement and the more attempts will be needed. For example, at a BTC complexity of ~101 trillion (101 * 10^12), miners needed on the order of 10^14 hash calculations to open a single block.

It is important to realize that the complexity of the bitcoin network was initially set at a minimum level (1.0) when the network was launched. As new miners joined and their combined processing power grew, the complexity began to increase exponentially. This serves as a kind of "adaptive threshold": it automatically adjusts to the current hash rate (the overall computational speed of the network) to keep the blockchain stable.

In other words, mining complexity regulates the rate at which blocks are found - making tasks easier or harder for miners, aiming for new blocks to appear roughly every 10 minutes.

When it's said that "network complexity has updated a record," it means that mining bitcoins has become harder than ever. In November 2024, for example, bitcoin's complexity exceeded 100 trillion (100 T) for the first time, setting an all-time high. By comparison, it was 1 at the very beginning, in 2009, and rose to 1.5 billion by the end of 2013, to 1.59 trillion by the end of 2017, and reached around 24 trillion after the 2021 boom. These huge numbers reflect the colossal increase in total miner power over the years of bitcoin's existence.

How the bitcoin network complexity adjustment algorithm works

The BTC network implements a special algorithm that automatically recalculates (adjusts) the difficulty every 2016 blocks. This corresponds to about twice every two weeks, since ideally 2016 blocks should be mined in 20160 minutes (2016 × 10 minutes). The algorithm works like this: it compares the actual time taken by the network to mine the last 2016 blocks with the benchmark two weeks.

• If the blocks were faster than the 20160 minutes (i.e. the average interval was less than 10 minutes), it means that the total power of miners has increased. In this case, when recalculating the difficulty is increased - so that the next blocks start to be found again about once every 10 minutes.
• If the blocks were mined slower than slower (the average interval is more than 10 minutes), then the aggregate hash rate has decreased, and the network simplifies the task - the complexity decreases.

Thus, the complexity of mining is dynamically adjusted and follows changes in network power. The difficulty recalculation formula is proportional to the ratio of 20160 minutes to the actual time spent per period (subject to some limitations on the maximum change per step). The recalculation results in a new target difficulty value that will be in effect for the next 2016 blocks.

An interval of ~2 weeks smooths out short-term spikes or drops in hashrate. If the difficulty were updated too often (e.g. every block), the slightest changes in power would cause difficulty spikes, making the work of miners more difficult. On the other hand, adjusting too infrequently would make the system inert to significant hashrate changes. The 2016 block period proved to be a compromise solution, allowing the network to respond to trends in mining in a timely manner, but without excessive volatility.

How the change in difficulty affects mining profitability

Mining profitability is directly related to the current difficulty and the reward per block. When the difficulty increases, it is harder to mine a new block: miners spend more resources (electricity, time) to calculate the right hash. If the bitcoin price and the reward per block remain the same, the increase in difficulty leads to a decrease in miners' profitability because each piece of equipment now has to find fewer blocks (the probability of finding a block decreases in proportion to the increase in difficulty). Simply put, each 1 TH/s hash rate yields less BTC at higher difficulty than before.

For example, a ~10% jump in difficulty will drop each miner's revenue by about the same 10%, all other things being equal. The industry even uses a metric hashprice, which is the revenue in dollars per unit of hashrate (say, 1 PH/s per day). Once the difficulty increases, hashprice immediately decreases. For example, on November 5, 2024, when bitcoin's complexity increased by 6.24% - to a new high - the miners' revenue index (Bitcoin Hashprice Index) fell by about 5.9%. That is, the increase in difficulty has almost directly reduced miners' revenue.

If the complexity decreases, the situation is reversed: the remaining miners in the network find it easier to mine blocks, and their share of the reward increases. This was the case, for example, in July 2021, when the complexity dropped sharply amid migration of miners from China. Those miners who continued to operate enjoyed increased returns for a few months until the difficulty recovered.

However, in practice, the profitability of mining depends not only on the difficulty, but also on the BTC exchange rate and the size of the reward per block. Miners often focus on the ratio of the value of bitcoin mined to electricity costs. If the price of BTC is skyrocketing, it can compensate for the increase in complexity - the return in fiat terms may even increase despite the increased complexity of mining. Conversely, when the price falls, even a decrease in complexity does not always save from losses. For example, after halving 2024, the complexity of the network still continued to rise, and the total revenue of miners decreased due to the simultaneous increase in complexity and decrease in reward.

In general, however, changing complexity serves as a balancing factor: miners' profits tend to rise to a level where some of the less efficient participants leave the game, restoring profitability for the remaining ones. This is a kind of self-regulation:

• If mining becomes too profitable (e.g., due to a rise in the price of BTC), new players come in, the difficulty increases - and the profit per unit of power falls to the average level.
• If mining becomes unprofitable (prices have fallen or rewards have decreased), some participants disconnect, the difficulty drops - and for the remaining ones the profit is restored.

In this way a dynamic equilibrium is achieved.

Factors affecting changes in mining complexity

The complexity of mining changes in response to various factors that affect the aggregate hash rate of the network. The main factors include:

Changes in network hashrate

Since the complexity recalculation directly depends on whether the last 2016 blocks were mined faster or slower, any increase in hashrate (adding new capacity) leads to an increase in complexity, while a decrease in hashrate (disabling parts of capacity) leads to a decrease in complexity. Hashrate, in turn, aggregates the impact of all of the following factors.

Bitcoin price

The BTC price is one of the most important drivers. When the price rises strongly, mining becomes more profitable, attracting new miners and incentivizing existing ones to expand their farms. The aggregate hashrate increases, and the complexity of the bitcoin network increases as a consequence. Conversely, as the price falls, some of the high-cost miners shut down, the hash rate drops, and after a while, the complexity drops as well. Historically, complexity and overall network processing power often increase in a bull market (following price increases), and can stagnate or fall in a prolonged bear market.

Technological advances and equipment

The development of mining hardware has a direct impact on complexity. For example, the shift from CPU to GPU mining in 2010, followed by the emergence of FPGAs and ASIC miners (2013 onwards) explosively increased the effective hash rate available to miners. New generations of devices are far superior to older generations in terms of performance and power efficiency. As a result, every technological leap has led to a dramatic increase in complexity. For example, with the advent of ASICs in 2013, complexity increased thousands of times in a year. By early 2015, it had increased tens of thousands of times over the first few years. And today, with the most advanced ASIC chips in use, complexity continues to update the highs as new, even more powerful models are released.

Power costs and access to resources

Mining is energy-intensive, so electricity costs and farm conditions affect profitability. In regions with cheap electricity (or a cold climate that makes cooling easier), miners can operate more profitably, staying in operation longer even as complexity increases. If, however, rates go up or outages occur somewhere, some miners will shut down, which can reduce hash rate. For example, power outages or seasonal reductions in hydroelectric power can temporarily disable a significant proportion of miners, affecting the network.

Regulation and bans

Government policy, too, has the power to dramatically change complexity. A prime example is the banning of mining in China in the spring of 2021. China had dominated global mining up to that point (Chinese miners had a share of over 50%). When China's regional authorities began shutting down mining farms in succession, approximately 90% of the country's mining companies shut down by July 2021. This led to a massive outflow of hashrate from the network and a record ~45% drop in difficulty compared to May 2021.

Then, when miners migrated to other countries (USA, Kazakhstan, Russia, etc.) and restarted their equipment, hash rate went up again and complexity recovered. Thus, regulatory actions (bans, taxes, license requirements) can cause significant fluctuations in complexity.

Halvings

Every 210000 blocks (approximately every 4 years), halving occurs in the Bitcoin network - the reward for a found block is halved. Halving does not directly affect the difficulty (the algorithm of recalculation is the same), but indirectly affects through the economics of mining. Immediately after halving, miners' profitability drops (they receive 2 times less BTC per block), which, all other things being equal, can lead to the disconnection of some participants. This happened, for example, after the 2020 halving, and in 2024 some less efficient miners could leave the market.

If the total hash rate decreases, the complexity will also decrease in the next recalculations, making life easier for the remaining miners. However, if the price of BTC rises rapidly (as it did in 2016 and 2020 after halving), the exit of miners may be negligible or short-lived. In 2024, despite another reduction in reward (from 6.25 to 3.125 BTC), network complexity increased by about 50% in one year - thanks to increased activity and the connection of new devices. But the combination of increased complexity and reduced rewards has significantly reduced the profit per terrages of capacity, prompting the industry to further optimize.

The factors listed above tend to work together. For example, in 2017, there was a rapid increase in complexity: the price of bitcoin broke records, many new miners joined, investing in modern ASICs - hash rate soared, causing constant increases in complexity. And in 2018, as the price plummeted, some of the hardware became obsolete, and electricity bills remained high - many miners shut down, causing a decrease in difficulty. Mining complexity is a very sensitive indicator: it aggregates market sentiment, technical progress, and external events.

The table with the dates of halvings already performed and expected dates of upcoming halvings

Hash rate and network complexity: how they are related

Hash rate (hash rate) is the rate at which miners perform hash calculations. It is measured in hashes per second (H/s, or more commonly in TH/s, EH/s, etc.). The complexity of the bitcoin network is closely related to hash rate, in fact they are two sides of the same coin:

• Hashrate determines how fast blocks are found. The higher the combined hash rate of all miners, the faster on average a matching hash for a new block will be found. If the difficulty remained constant, an increase in hashrate would speed up the mining of blocks.
• Difficulty regulates the frequency of blocks at a given hashrate. The difficulty recalculation algorithm increases or decreases the difficulty to compensate for changes in hashrate. As a result, a new balance is established: a higher hashrate results in a higher complexity, while a lower hashrate results in a lower complexity.

In steady state, these two metrics are balanced: the average block time is ~10 min. Practically, this means that with the current hashrate, the complexity has settled at a level where blocks are neither ahead nor lagging relative to the graph. If hashrate increases, blocks will be more frequent until the next recalculation (e.g., every 9 minutes instead of 10), and after 2016 blocks, the network will increase in complexity roughly proportional to the increase in hashrate. Conversely, if power drops, blocks will slow down (say, to 12 minutes), and after 2016 blocks, complexity will decrease.

We can say that mining complexity ~is directly proportional to the total hashrate of the network in the preceding period. For example, at the beginning of 2023, the average hashrate of the network was around 280 EH/s, and the complexity was ~39 T (trillion). A year and a half later, at the end of 2024, the hashrate reached over 700 EH/s - the complexity in response grew to ~100 T. The ratio of change is roughly the same. These numbers show how much the total computational power of the network has grown, and complexity mirrors these changes almost exactly.

Another facet of the hashrate-complexity relationship: without complexity, a high hashrate could lead to unnecessarily fast coin mining, violating bitcoin's monetary policy. And without an increase in hash rate, complexity itself would not increase - there is no point in increasing complexity if the network does not have more capacity. Thus, hash rate (power) is the cause, and complexity is the effect, realizing the mechanism of maintaining equilibrium.

For miners, this relationship means that the individual chance of finding a block is equal to the ratio of their own power to the total hash rate of the network. But because the overall network is constantly changing, miners also have to account for future changes in difficulty. For example, when investing in a new farm, they predict how the total hash rate (and complexity) might increase in the coming months. If all miners double capacity, the difficulty will soon double as well - and everyone's profits will return to previous levels. Therefore, experienced miners closely monitor the dynamics of hash rate and difficulty: these indicators help to assess competition in the network and future profitability.

How to track the complexity of the bitcoin network

Finding out the current bitcoin complexity value and its history of changes is fairly easy - there are many public sources. Several ways to track the network's complexity:

• Blockchain Explorers. Many popular blockchain observers (Blockchain.com, Blockchair, BTC.com, etc.) show the current complexity of the bitcoin network on the main statistics page. The date of the last recalculation and percentage of change are usually listed there as well, and sometimes a prediction of the next change in complexity based on the current hashrate.
• Specialized services and graphs. Sites like Bitinfocharts, CoinWarz, MiningPoolStats, etc. provide visual graphs of difficulty and hashrate over time. For example, Bitinfocharts provides a graph of average daily complexity from 2009 to today, while CoinWarz displays recent changes and the current level (as of April 2025, it's around 121 trillion).
• Mining pool data. Large mining pools often publish real-time network statistics. On their dashboards you can find the current difficulty, the remaining number of blocks until the next recalculation and a preliminary estimate of how it will change. News reports often refer to data from such pools - such as CloverPool or AntPool - to capture record complexity figures.
• Noda. For the most meticulous, you can find out the difficulty directly by running your BTC node. Each block contains "Bits" in its header, a compressed representation of the target from which the difficulty level is calculated. By querying the RPC interface of the node for information about the last block, the current complexity can be extracted. However, this is more of a theoretical method for enthusiasts; web interfaces are sufficient for most users.

In addition to the complexity value itself, it is useful to track other metrics related to it: the overall hash rate (to understand why complexity is changing), the interval between blocks, and the approach of important events (e.g., halving, after which complexity dynamics may change). Together, this data provides a complete picture of the state of the network.

Historical fluctuations in complexity and their causes

The history of bitcoin mining difficulty goes back more than 14 years, and in that time the figure has gone from 1 to hundreds of trillions. In general, the complexity trend is upward, reflecting the exponential growth of capacity connected to the network. However, there have been periods of significant declines and spikes due to external events. Consider some milestones and fluctuations in complexity:

• January 2009: launch of the bitcoin network, complexity = 1.00. The baseline from which it all started (minimum possible complexity).
• December 2013: difficulty ≈ 1.5 billion (1 500 000 000 000) - huge growth amid the emergence of industrial ASIC mining farms and the soaring BTC exchange rate (+150 000 000 000 000% since launch!).
• December 2017: complexity ≈ 1.59 trillion (1 590 000 000 000 000) - a new record at the height of the 2017 crypto boom (+~106 000% since 2013 000.), mass connectivity of equipment worldwide.
• May 2021: complexity ≈ 25 trillion - historic peak at that time, reached before China's mining ban (+~1 470% since 2017 year).
• July 2021: complexity ≈ 14 trillion - sharp drop due to Chinese miners shutting down (-45% relative to May 2021). This is the largest decline in difficulty in the history of the network (in one recalculation in early July, the decline was a record -27.9%).
• January 2023: complexity ≈ 39 trillion - recovery and continued growth after the 2021 downturn, a new high amid gradual price increases and farm relocation (+~178% since July 2021).
• November 2024: complexity ≈ 101.65 trillion - the first ever exit beyond the 100 trillion mark (+~160% by early 2023 yr.), thanks to a record global hash rate of ~733 EH/s and increased interest in mining despite the recent halving.
• January 2025: complexity ≈ 110.45 trillion - another high (+9.95% for 2024 year). Complexity has risen continuously for 8 consecutive recalculations, indicating a steady inflow of new capacity even after the block award was reduced.

In the early years, growth was by orders of magnitude, then the dynamics slowed down in percentage terms, although the absolute increments are enormous. Both growth spikes (e.g., technological breakthroughs and price rallies) and the largest drop (in the summer of 2021 due to the Chinese ban) are reflected.

As the table shows, the sharpest long-term decline occurred in 2021 - aggregate complexity nearly halved in a matter of months. Previously, significant drops have only been recorded episodically: for example, in November 2011 (-18% per conversion) and December 2018 (-15% per conversion), when the decline in complexity was driven by a price crash after the 2011 and 2017 peaks, respectively. Nevertheless, each time, the network adapted: after the mining frenzy cooled, weak players left, complexity fell, mining became profitable again - and then complexity crept back up again along with the market recovery.

Reasons for historical fluctuations

• 2011: The first spike in BTC price (~to $30) was followed by a collapse, many miners at the time (CPU/GPU) shut down. Complexity, having reached ~1.24 million by the end of summer, rolled back to ~730k (-41% of the peak) by December. However, by 2013, with new price increases and the arrival of ASICs, previous values had been surpassed many times over.
• 2017-2018: The ICO boom and bitcoin's rise to $20k pushed a record influx of miners - the complexity for 2017 increased almost 10 times. In 2018, as the price fell below $4000, mining became marginally profitable, leading to the first series of declines in difficulty in years (but even after the drop, the end of 2018 had difficulty many times higher than the end of 2017). By the way, December 2018 marked the second largest single decline in complexity - minus 15.1%.
• 2020-2021: In 2020, pandemic and halving temporarily put the brakes on complexity growth (there was a ~-16% drop in March 2020). But then a new bullrun began, institutional investment heated up the BTC price to $64k (in April 2021) and miners ramped up capacity at a record pace. Complexity updated historical highs almost every recalculation in late 2020 and early 2021. China's ban then abruptly cut short this growth: in July 2021, the network experienced an unprecedented decline in complexity of nearly 28% in a single step and a cumulative 45% relative to the peak. But by the end of 2021, thanks to the migration of miners, the figure had fully recovered, reaching new highs at the turn of 2022.
• 2022-2024: Despite the "cryptozyme" of 2022 (70% price drop from ATH), complexity continued its general upward trend, although the growth rate slowed. Modern miners appeared ready to weather the drawdown by utilizing energy efficient installations. By the beginning of 2023, the market had revived, and the complexity was again growing at an accelerated pace. In 2024, after a slight decline after halving in the spring, bitcoin complexity broke through the symbolic milestone of 100 trillion by the fall. Over the whole of 2024, it grew by about 50%, with 18 out of 27 upward recalculations - evidence of the industry's high competitiveness even with the decreased reward.

The bottom line

The complexity of bitcoin mining is constantly striving to new heights. The metric reflects the growth in total computing power and long-term confidence of miners in the first cryptocurrency. Short-term failures have occurred due to a combination of factors - falling prices, man-made limitations, or regulatory bans - but each time the network has adapted and continued to grow. For newcomers to the crypto industry, this serves as a lesson: mining complexity is non-linear, but it almost always increases in the long term. And for experienced market players, tracking complexity and hash rate is a necessary element of strategy, allowing them to assess network health and security, as well as predict changes in the economics of mining.

The bitcoin network is now so complex and secure that any fluctuations in complexity only confirm its ability to evolve and survive in any environment.