What Is the Practical Limit to How High the Mining Difficulty Can Be Set?
The mining difficulty has a theoretical maximum limit set by the protocol, which corresponds to the lowest possible target hash (the hardest puzzle). However, the practical limit is determined by the total hash power that the network can economically sustain.
As difficulty increases, the energy cost per coin rises. If the price of the coin does not keep pace, the difficulty will eventually outpace profitability, forcing miners to shut down and causing the difficulty to decrease at the next adjustment.
Glossar
Cheap Electricity Influence
Advantage ⎊ Cheap electricity influence within cryptocurrency, options, and derivatives markets denotes a cost differential enabling profitable arbitrage or operational efficiencies.
Mining Difficulty
Calibration ⎊ This parameter serves as an automated feedback loop within Proof-of-Work systems, recalibrating the computational hurdle required to discover a valid block.
Practical Limit
Constraint ⎊ The practical limit, within cryptocurrency derivatives and options trading, represents the operational boundary beyond which further optimization or expansion becomes infeasible due to real-world limitations.
Lowest Possible Target Hash
Threshold ⎊ The lowest possible target hash represents the minimum difficulty level allowed by a Proof-of-Work protocol.