Difficulty Bomb

What Is Difficulty Bomb?

The difficulty bomb is the term used to indicate the increasing level of mining difficulty that results in an increased amount of time required to mine a new block on the Ethereum blockchain. Some say this will eventually lead to a situation in the future in which mining Ethereum will become impossible and unprofitable. Various measures are being put in place by different versions of Ethereum blockchains to circumvent the problem.

How the Difficulty Bomb Works

In the world of cryptocurrency, the term difficulty is a measure of how difficult it is to mine a block in a blockchain for a particular cryptocurrency. A high cryptocurrency difficulty means it takes additional computing power to verify transactions entered on a blockchain.

The original Ethereum blockchain came with an intrinsic feature that increases the difficulty of mining over time — that is, the more blocks are mined over time, the more difficult and more time-consuming it is to mine the next block. Typically, the time it takes to mine a block increases by around 10-20 seconds for every 100,000 blocks mined.

Eventually, this will slow block mining down in exponential terms and its economic benefit will become less attractive to miners. The onset of this scenario is referred to as “Ethereum’s Ice Age.” During this time, Ethereum will transition from Proof of Work (PoW), which requires miners to earn ether by competing against each other to solve puzzles and earn rewards, to Proof of Stake (PoS), where rewards are distributed on the basis of staking or coin ownership.

On January 1, 2020, an upgrade to the blockchain network was passed which effectively delayed Ethereum's 'Ice Age' by 4 million blocks (around 611 days), giving developers plenty of time to arrange the eventual transition to proof-of-stake and Ethereum 2.0. This was the third time the difficulty bomb was delayed. The other two delays occurred with the Byzantium upgrade in October 2017 and the Constantinople in February 2019.

Why Was the Difficulty Bomb Introduced? 

Ethereum’s difficulty bomb is a deterrent for miners, who may opt to continue with PoW even after the blockchain transitions to PoS. Their primary reason for doing so may be explained by the shift in the balance of power and profits away from miners into the hands of investors and users of the blockchain. If all miners do not make the switch to proof of stake, then there is the danger that Ethereum’s blockchain might fork. A similar situation occurred in 2017 when Bitcoin miners forced a fork in its blockchain by throwing their weight behind Bitcoin cash.

Ethereum’s founders, however, foresaw such an eventuality and programmed its blockchain to incorporate increases in difficulty levels for its mining algorithm. Essentially, Ethereum developers introduced the difficulty bomb to better achieve the ultimate goal of transitioning to proof of stake and Ethereum 2.0 as well as to encourage agreement between miners.

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