How Does a Difficulty Adjustment Affect the Immediate Profitability of All Miners?
A difficulty adjustment directly impacts profitability. If difficulty increases, the share of the total reward earned by each unit of hash power decreases, immediately lowering profitability for all miners.
Conversely, a decrease in difficulty makes mining more profitable. This is why miners closely monitor the expected difficulty change as it can dictate whether their operation remains viable.
Glossar
Hash Power
Measurement ⎊ Hash power represents the total computational processing power dedicated to mining on a proof-of-work blockchain.
Difficulty Adjustment Cycle
Algorithm ⎊ ⎊ The Difficulty Adjustment Cycle represents a core tenet of proof-of-work blockchain consensus, dynamically recalibrating mining difficulty to maintain a consistent block generation time despite fluctuations in network hashrate.
Difficulty Adjustment
Mechanism ⎊ Difficulty adjustment is a crucial mechanism in proof-of-work PoW blockchain networks, particularly Bitcoin, that automatically recalibrates the computational effort required to mine a new block.
Miners
Validation ⎊ The term "Miners," within cryptocurrency contexts, fundamentally denotes entities responsible for validating and adding new transaction records to a blockchain.