How Does a Cryptocurrency’s Difficulty Adjustment Algorithm Function?

The difficulty adjustment algorithm is a self-regulating mechanism that automatically increases or decreases the mining difficulty. Its primary function is to maintain a relatively consistent block production time, regardless of how many miners join or leave the network.

For Bitcoin, the difficulty adjusts every 2016 blocks (about two weeks) to ensure the average block time remains close to the 10-minute target. If blocks are found too quickly, difficulty rises; if too slowly, it falls.