The difficulty didn't change from 1 until the end of the year, Is that because both Satoshi and various early adopters stopped mining or am I missing something about the gating of the hashing rate?
I would like to know the answer about this, too. The difficulty was 1.0 through 2009, see graph. the choice of date seems deliberate though, or it is a random coincidence.
Here are some interesting quotes to answer that question.
We had our first automatic adjustment of the proof-of-work difficulty on 30 Dec 2009.
The minimum difficulty is 32 zero bits, so even if only one person was running a node, the difficulty doesn't get any easier than that. For most of last year, we were hovering below the minimum. On 30 Dec we broke above it and the algorithm adjusted to more difficulty. It's been getting more difficult at each adjustment since then.
The adjustment on 04 Feb took it up from 1.34 times last year's difficulty to 1.82 times more difficult than last year. That means you generate only 55% as many coins for the same amount of work.
The difficulty adjusts proportionally to the total effort across the network. If the number of nodes doubles, the difficulty will also double, returning the total generated to the target rate.
Essentially it was (coincidentally) around one year after release that bitcoin's difficulty rose for the first time. Before then, blocks averaged at more than 10 minutes apart and the difficulty could not ever go below 1.00, even if the network does 1khash/s.
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