DEFINITION of Difficulty Bomb
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. 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.
BREAKING DOWN Difficulty Bomb
The original Ethereum blockchain comes 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. GitHub provides a simulation of this increase, where both these figures increase exponentially over time. Anyone mining Ethereum would have noticed that the mining output has been decreasing as they continued the mining over the last few months. If the situation continues as is, mining Ethereum will become impractical and unprofitable in a few months time. It is therefore aptly named “Difficulty Bomb,” to indicate the ticking time-bound problem. (See also, How Do You Mine Ethereum?)
This feature of increasing difficulty was an integral part of the native Ethereum blockchain and was inherited by the two forked versions – Ethereum and Ethereum Classic.
Ethereum Classic (ETC) has taken a lengthy, detailed and phase-wise approach to fix the problem. The discussions among the community members started around 2016 to tackle the Difficulty Bomb problem. It was followed by a fork, called "Die Hard," in January 2017 which “froze” the Difficulty Bomb and reduced block time. During May 2018, another hard fork was performed at block 5,900,000 which aims to take the block time down to just around 14 seconds from the existing 26 seconds. (For more, see Ethereum Classic Hard Forks Over 'Difficulty Bomb'.)
Ethereum (ETH) is attempting to tackle the problem by switching from the existing proof of work (POW) consensus algorithm to proof of stake (POS) algorithm. It will make mining rewards dependent on the amount (stake) held by the participants, instead of the present-day power- and resource-intensive computing power-based rewards. In case the change of algorithm does not happen, the Ethereum community may opt for a hard fork to either remove the Difficulty Bomb completely, or to delay it, similar to the approach taken by Ethereum Classic. This will allow more time for the switch from POW to POS.