Ethereum: Winter is Coming!

By Christoph Bergmann May 31, 2017 10:43 AM EST

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Ethereum marches into the Ice Age; the Difficulty Bomb starts to become noticeable, as the miners need more time to find new blocks. This freezing of the network aims to help to master the switch to Proof of Stake.

Currently, the Difficulty Bomb of Ethereum is hard to see. Since the beginning of 2017 the price of the second most valuable cryptocurrency is sharply rising, and with this, naturally, the hash rate of the miners and the difficulty of mining are rising too.

But if you take a closer look, you will find something unusual. The difficulty is growing a bit faster than the hash rate. Usually, both grow in parallel, or the hash rate hurries ahead.

It happens in all cryptocurrencies that the cryptographic riddles the miners have to solve to find a block are becoming more difficult when the miners invest more power. If they would not, neither the interval between the blocks nor the generation rate of new coins would be stable. Without an adjustment of the difficulty to the hash rate, every cryptocurrency would suffer from runaway inflation.

In Ethereum, however, this balance is slowly falling apart. The difficulty is growing stronger than the hash rate. The result is that the system is slowing down. While until now there has been a block every 14 seconds, it has become 15 seconds during April. That is not much, but is significant growth.

At the same time, the daily rate of newly generated ether is falling. In January and February, the miners created roughly 30,000 ether each day. At the time of writing, this rate has been reduced to 27,500. If the blocks arrive more slowly, less ether are generated. That’s easy to get.

Right now the impact of the difficulty bomb is little

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