Ethereum and its ‘difficulty bomb’

Ethereum, the world’s second largest cryptocurrency by market value, has undergone a series of upgrades and changes since it made its official public debut in 2015. One of the more recent ones was the introduction of its ‘difficulty bomb,’ deployed in September 2022, which was built to discourage use of Ethereum’s original proof-of-work (PoW) consensus mechanism.

In this guide, we’ll explain what the difficult bomb is, why it was introduced, and its impact on Ethereum mining. We’ll also look at the challenges faced with the difficult bomb, and answer some frequently asked questions around Ethereum mining.

What is Ethereum’s ‘difficulty bomb’?

Ethereum first launched with a proof-of-work (PoW) consensus mechanism, much like the one used by Bitcoin. It relied on miners with powerful computer hardware to process new blocks, which meant that it was incredibly energy-hungry and inefficient. As Ethereum grew in popularity and value, the number of miners increased and the more competitive this became.

If mining difficulty never changes, then obviously a greater number of miners leads to new blocks being created faster than intended. This, in turn, leads to faster production of new ETH tokens, which increases the circulating supply and decreases the token’s overall value. To prevent this, Ethereum had a built-in system for increasing mining difficulty over time.

This system made processing new blocks more and more difficult, but not so difficult that the costs associated with mining outweighed the potential reward. However, when Ethereum executed ‘The Merge’ in September 2022, which swapped its existing PoW consensus algorithm for a significantly more efficient proof-of-stake (PoS) system, everything changed.

Ethereum no longer wanted the mining process to exist. Therefore, a difficulty bomb was introduced at block 15,530,314 that suddenly and exponentially increased the time it took to create a new block to a point at which the reward for doing so would no longer outweigh the cost. This happened on September 14 — the day before The Merge went live.

Why did the Ethereum difficulty bomb get introduced?

The difficulty bomb was designed to eliminate mining altogether. Not only does Ethereum’s new PoS system reduce energy consumption by 99.9%, but it brings a number of other considerable benefits, including greater scalability and security. It would have been a waste of time, however, if the majority of the Ethereum network ignored it and continued to use PoW instead.

So, not only did the difficulty bomb make mining ineffective, but it also discouraged the creation of new Ethereum forks that would continue to run with the PoW system going forward. It also forced the upgrade of network nodes, which had no choice but to switch to PoS since there was no need and no reward for mining anymore.

What is the impact on mining from the difficulty bomb?

As we touched on above, the difficulty bomb, combined with the introduction of a new PoS consensus algorithm, has made it so that ETH simply cannot be mined anymore. As a result, its impact on mining is that it has all but eliminated it. Powerful and expensive mining rigs are no longer necessary, so taking part in the Ethereum network is now easier and more affordable.

The downside, at least for former miners, is that the mining rigs they had already built — some of which were mining ‘farms’ that cost hundreds of thousands of dollars — are essentially now obsolete. There is no need for them anymore, at least not on the Ethereum network, though the hardware could be used for other mineable cryptocurrencies, such as Bitcoin.

What are the challenges faced by the difficulty bomb?

The biggest challenge faced by the difficulty bomb was when to ‘detonate’ it. Developers had to keep delaying its deployment because Ethereum’s switch to PoS kept getting pushed back. Introducing it too early, such as weeks or months before The Merge, would have been detrimental to the network because it would have severely slowed down transaction times.

In fact, there were six upgrades to the Ethereum network, dating back to 2017, which postponed the difficulty bomb’s introduction. Those were:

• 2017: Byzantium update
• 2019: Constantinople update
• 2020: Muir Glacier update
• 2021: London update
• 2021: Arrow Glacier update
• 2022: Gray Glacier update

Some of these upgrades also brought improvements or changes to Ethereum, but three of them — those that occurred in 2020, 2021, and 2022 — were rolled out specifically to delay the detonation of the difficulty bomb and for nothing else.

Sources :

• Difficulty bomb
• Difficulty bomb : Ethereum’s Increasing Difficulty in Mining
• Ethereum glossary : difficulty bomb