Difficulty Bomb

What Is Difficulty Bomb?

Ethereum is a cryptocurrency network that, like others, relies on a consensus mechanism that uses large amounts of energy and computational power. This encourages scalability and centralization of the technology into large mining farms created by people or businesses with significant assets. However, this centralization goes against the original tenets behind cryptocurrency.

Ethereum's "difficulty bomb" refers to the intentional and sudden increase in mining difficulty that will occur when ETH 2.0 and proof-of-work update is released to the Ethereum network. The intent behind the difficulty bomb is to exponentially increase the amount of time it takes to mine a new block on the Ethereum blockchain so that it:

  • Encourages cryptocurrency miners to move away from energy-intensive proof-of-work mining by removing the incentive
  • Takes away the ability to centralize currency creation and ownership
  • Discourages blockchain forks
  • Forces node upgrades

Key Takeaways

  • Ethereum’s “difficulty bomb” refers to a sudden increase in mining difficulty to discourage miners from opting to stay with the proof-of-work mechanism after its transition to proof-of-stake.
  • Difficulty refers to the time and computational power needed to verify a cryptocurrency's transactions within a blockchain.
  • Ethereum's difficulty bomb has been delayed five times as developers fine-tune Ethereum 2.0.

Understanding the Difficulty Bomb

In the world of cryptocurrency, the term difficulty describes how difficult the computations needed to mine a block in a blockchain for a particular cryptocurrency are. Mining a cryptocurrency is often confused with creating a coin; however, mining is the verification process that involves solving the 64 character hash that encrypts the transaction information. When a miner's machine solves the hash, they are rewarded with a coin.

The original Ethereum blockchain came with an intrinsic feature that increased the difficulty of mining over time—the more blocks that were mined, the more difficult and time-consuming it became to mine the next block. The difficulty bomb is designed to increase the difficulty of solving the hash exponentially, eventually making it too expensive in time and energy to be worth the cost.

While the vast amounts of energy used in mining have raised concerns, Ethereum's developers always intended to move to proof-of-stake, which is expected to consume 99% less energy than proof-of-work.

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 the hash and earn rewards, to proof-of-stake (PoS), where rewards are distributed on the basis of staking coins. Under proof-of-work, coins are "staked" by the owners, or placed as collateral for the random chance to validate transactions and earn rewards.

Plans for the Difficulty Bomb

Ethereum’s difficulty bomb is a deterrent for miners, who may opt to continue with the PoW mechanism even after the blockchain transitions to PoS. The primary reason miners won't want to switch will most likely be resistance to a reduction in profits. If all miners do not switch to proof-of-stake, then there is a possibility that Ethereum’s blockchain might fork.

Ethereum’s founders anticipated this and programmed its blockchain to incorporate increases in difficulty levels for its mining algorithm. They called this the difficulty bomb, which is supposed to influence the switch from PoW to PoS and assist in the transition to Ethereum 2.0.

However, migrating to ETH2 under PoS is an enormous challenge for the developers—they have had to keep pushing the difficulty bomb release date back. Releasing it before upgrading to PoS would be counterproductive—the difficulty bomb would greatly slow down transaction verification and quite possibly reduce the cryptocurrency's value to investors and users.

There have been five upgrades that, among other fixes, pushed back the difficulty bomb:

  • 2017: Byzantium update
  • 2019: Constantinople update
  • 2020: Muir Glacier update (difficulty bomb only)
  • 2021: London update
  • 2021: Arrow Glacier update (difficulty bomb only)

After the upgrade to ETH 2.0, there will be no need for the difficulty bomb to exist because Ethereum proof-of-work mining will not be rewarded.

What Is the ETH Difficulty Bomb?

The Ethereum difficulty bomb is a code adjustment that makes it much harder for a miner to verify transactions on the blockchain and earn a reward under the proof-of-work consensus mechanism. It is designed to support the transition to ETH 2.0, which will use the proof-of-stake consensus mechanism.

Why Is ETH Difficulty So High?

The difficulty lies within the proof-of-work consensus mechanism, which validates transactions. Under PoW, the difficulty increases with the number of blocks that have been validated. However, ETH is transitioning to ETH 2.0, which will use proof-of-stake. As a result, randomly selected validators will be used instead of competitive mining.

What Is the Easiest Crypto to Mine?

Cryptocurrency mining, or using computational power to validate a block's hash and receive a reward, has gotten much more difficult due to its competitive nature. Mining farms and pools have cornered the market on the higher valued cryptocurrencies, so the easiest to mine will be one that uses PoW and has the least value (measured in its return to miners or its market price).

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author does not own Ethereum.

Article Sources

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  1. ethereum.org. "Ethereum Whitepaper: Scalability." Accessed Dec. 23, 2021.

  2. Ethereum Foundation Blog. "Ethereum’s Energy Usage Will Soon Decrease by ~99.95%." Accessed Dec. 23, 2021.

  3. Ethereum Improvement Proposals. "EIP-649: Metropolis Difficulty Bomb Delay and Block Reward Reduction." Accessed Dec. 23, 2021.

  4. Ethereum Improvement Proposals. "EIP-1234: Constantinople Difficulty Bomb Delay and Block Reward Adjustment." Accessed Dec. 23, 2021.

  5. Ethereum Improvement Proposals. "EIP-2384: Muir Glacier Difficulty Bomb Delay." Accessed Dec. 23, 2021.

  6. Ethereum Improvement Proposals. "EIP-3554: Difficulty Bomb Delay to December 2021." Accessed Dec. 23, 2021.

  7. Ethereum Improvement Proposals. "EIP-4345: Difficulty Bomb Delay to June 2022." Accessed Dec. 23, 2021.

  8. ethereum.org. "The Eth2 Vision." Accessed Dec. 23, 2021.

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